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Tesla Rises on Future EV Plans Despite Q1 Miss: ETFs in Focus
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Tesla Motors (TSLA - Free Report) reported weaker-than-expected first-quarter 2024 results, missing estimates on both fronts. The electric automaker continued its losing streak for the third consecutive quarter and posted the biggest revenue drop since 2012.
However, the electric carmaker infused optimism, signaling its plans to move sooner than expected with the production of lower-priced models and the continued investment in future “robotaxis.” This has helped Tesla to rebound from the lowest level in 15 months. Shares of Tesla spiked about 13% at the close in after-market hours.
Given the growth potential, investors should buy ETFs having a substantial allocation to this luxury carmaker. These include Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report) , MicroSectors FANG+ ETN (FNGS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) and ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) .
Q1 Earnings in Focus
Adjusted earnings per share came in at 45 cents, missing the Zacks Consensus Estimate of 46 cents and declining from the year-ago earnings of 85 cents. Revenues declined 9% year over year to $21.03 billion and fell short of the Zacks Consensus Estimate of $22.15 billion. The revenue decline marks the steepest drop since 2012.
Earlier this month, Tesla delivered 386,810 cars (369,783 Model 3 and Y, and 17,027 Model S and X) worldwide in the first quarter, down 8.5% year over year. The electric carmaker produced a record 433,371 vehicles (412,376 Model 3 and Y, and 20,995 Model S and X) during the quarter, down 1.7% from the year-ago quarter. The decline was due to “the early phase of the production ramp-up” of its updated Model 3 at its Fremont factory and plant shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin, which led to a weeklong production halt in its Germany factory (read: Tesla Stock Sinks After a Big Q1 Delivery Miss: ETFs in Focus).
Growth Plans
Chief executive Elon Musk expects Tesla’s turnaround to happen as early as the end of 2024. In its letter to shareholders. The leading electric carmaker said that it will accelerate the launch of new, affordable EV models, whose production might begin in early 2025, ahead of the initial target in the second half of 2025. The new and more affordable models will be built on Tesla's next-generation platform and will be produced on the same production sites as Tesla's current offerings. Additionally, Tesla is working toward increasing production by 50% this year.
Further, Tesla is betting on driverless software and artificial intelligence in an attempt to revive sales. It is slated to introduce “robotaxis” — a driverless car without a steering wheel or pedals on Aug 8. The next-generation vehicle is widely thought to be key to the electric automaker’s survival, especially as competition heats up in the EV space.
ETFs in Focus
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 52 securities in its basket, Tesla takes the second spot with 11.2% assets.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with an AUM of $18.7 billion and an average daily volume of around 4 million shares. It charges 9 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report)
Simplify Volt Robocar Disruption and Tech ETF is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology. It employs a call option overlay to seek boosts in performance during extreme moves up in Tesla while holding a tech index for diversification and put options as a hedge.
Simplify Volt Robocar Disruption and Tech ETF charges investors 0.95% in annual fees. It has accumulated $3.8 million in its asset base.
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Tesla’s share coming in at 10% (read: Should You Buy the Dip in Magnificent 7 ETFs Before Q1 Earnings?).
MicroSectors FANG+ ETN has accumulated $241.4 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 143,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 304 stocks in its basket. Of these, Tesla occupies the second position with a 9.2% allocation. Broadline retail takes the largest share at 25.5%, and automobile manufacturers, restaurants and home improvement retail round off the next three spots (read: 5 Favorite Sector ETFs of Q1 Earnings).
Vanguard Consumer Discretionary ETF charges investors 10 bps in annual fees, whereas volume is moderate at nearly 42,000 shares a day. The product has managed about $5 billion in its asset base and carries a Zacks ETF Rank #1 with a Medium risk outlook.
ARK Autonomous Technology & Robotics ETF is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of products or services, and technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials, and transportation. This approach results in a basket of 35 stocks, with Tesla occupying the top spot with a 9.7% share.
ARK Autonomous Technology & Robotics ETF has accumulated $791.3 million in its asset base and charges 75 bps in fees per year. It trades in a volume of 122,000 shares a day on average.
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Tesla Rises on Future EV Plans Despite Q1 Miss: ETFs in Focus
Tesla Motors (TSLA - Free Report) reported weaker-than-expected first-quarter 2024 results, missing estimates on both fronts. The electric automaker continued its losing streak for the third consecutive quarter and posted the biggest revenue drop since 2012.
However, the electric carmaker infused optimism, signaling its plans to move sooner than expected with the production of lower-priced models and the continued investment in future “robotaxis.” This has helped Tesla to rebound from the lowest level in 15 months. Shares of Tesla spiked about 13% at the close in after-market hours.
Given the growth potential, investors should buy ETFs having a substantial allocation to this luxury carmaker. These include Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) , Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report) , MicroSectors FANG+ ETN (FNGS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) and ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report) .
Q1 Earnings in Focus
Adjusted earnings per share came in at 45 cents, missing the Zacks Consensus Estimate of 46 cents and declining from the year-ago earnings of 85 cents. Revenues declined 9% year over year to $21.03 billion and fell short of the Zacks Consensus Estimate of $22.15 billion. The revenue decline marks the steepest drop since 2012.
Earlier this month, Tesla delivered 386,810 cars (369,783 Model 3 and Y, and 17,027 Model S and X) worldwide in the first quarter, down 8.5% year over year. The electric carmaker produced a record 433,371 vehicles (412,376 Model 3 and Y, and 20,995 Model S and X) during the quarter, down 1.7% from the year-ago quarter. The decline was due to “the early phase of the production ramp-up” of its updated Model 3 at its Fremont factory and plant shutdowns resulting from shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin, which led to a weeklong production halt in its Germany factory (read: Tesla Stock Sinks After a Big Q1 Delivery Miss: ETFs in Focus).
Growth Plans
Chief executive Elon Musk expects Tesla’s turnaround to happen as early as the end of 2024. In its letter to shareholders. The leading electric carmaker said that it will accelerate the launch of new, affordable EV models, whose production might begin in early 2025, ahead of the initial target in the second half of 2025. The new and more affordable models will be built on Tesla's next-generation platform and will be produced on the same production sites as Tesla's current offerings. Additionally, Tesla is working toward increasing production by 50% this year.
Further, Tesla is betting on driverless software and artificial intelligence in an attempt to revive sales. It is slated to introduce “robotaxis” — a driverless car without a steering wheel or pedals on Aug 8. The next-generation vehicle is widely thought to be key to the electric automaker’s survival, especially as competition heats up in the EV space.
ETFs in Focus
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 52 securities in its basket, Tesla takes the second spot with 11.2% assets.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with an AUM of $18.7 billion and an average daily volume of around 4 million shares. It charges 9 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report)
Simplify Volt Robocar Disruption and Tech ETF is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology. It employs a call option overlay to seek boosts in performance during extreme moves up in Tesla while holding a tech index for diversification and put options as a hedge.
Simplify Volt Robocar Disruption and Tech ETF charges investors 0.95% in annual fees. It has accumulated $3.8 million in its asset base.
MicroSectors FANG+ ETN (FNGS - Free Report)
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index. It is designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Tesla’s share coming in at 10% (read: Should You Buy the Dip in Magnificent 7 ETFs Before Q1 Earnings?).
MicroSectors FANG+ ETN has accumulated $241.4 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 143,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Vanguard Consumer Discretionary ETF (VCR - Free Report)
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 304 stocks in its basket. Of these, Tesla occupies the second position with a 9.2% allocation. Broadline retail takes the largest share at 25.5%, and automobile manufacturers, restaurants and home improvement retail round off the next three spots (read: 5 Favorite Sector ETFs of Q1 Earnings).
Vanguard Consumer Discretionary ETF charges investors 10 bps in annual fees, whereas volume is moderate at nearly 42,000 shares a day. The product has managed about $5 billion in its asset base and carries a Zacks ETF Rank #1 with a Medium risk outlook.
ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report)
ARK Autonomous Technology & Robotics ETF is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of products or services, and technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials, and transportation. This approach results in a basket of 35 stocks, with Tesla occupying the top spot with a 9.7% share.
ARK Autonomous Technology & Robotics ETF has accumulated $791.3 million in its asset base and charges 75 bps in fees per year. It trades in a volume of 122,000 shares a day on average.