Why Tesla Stock Rally Ahead of Earnings Day Tomorrow

Investors will soon see the impact Tesla’s surprisingly strong second-quarter sales have on the company’s bottom line.

Tesla (TSLA 5.15%) shares have been a rollercoaster ride this year. After falling more than 40% to bottom at nearly $140 a share in April, Tesla stock has rebounded to a year-to-date gain ahead of its second-quarter earnings report.

Tesla will provide a full second-quarter update tomorrow after the market closes, and investors will be listening closely. Anticipation is sending Tesla shares into a tailspin early this week. As of 3:15 p.m. ET, shares were up 5%. Some of that also has to do with election-year politics and what it could mean for the electric vehicle (EV) leader.

Elon Musk hedges Tesla’s bets

Tesla has surged nearly 80% since April 22, as investors anticipated software updates for fully autonomous driving and after surprisingly strong vehicle deliveries in the second quarter. The company delivered nearly 444,000 electric vehicles in the quarter while also reducing its vehicle inventory. The result could be a more profitable quarter than many analysts initially expected.

And CEO Elon Musk has also been in the spotlight for his public comments on U.S. politics. After recently endorsing former President Donald Trump, Musk doubled down on his support this weekend. Trump responded with a much warmer view of electric vehicles in general. At a rally over the weekend, the anti-electric vehicle former president said, “I love Elon MuskI keep talking about electric cars. … I’m all for them.”

While the election is far from decided, Musk appears to be working to position the EV sector, and his company in particular, for any potential outcome. While a future Trump presidency could mean less government support and subsidies, Tesla is the only profitable EV maker that could tolerate reduced tax credits and other assistance for EV buyers.

But what’s more imminent is what Tesla will say tomorrow about electric vehicle earnings, battery storage rollouts and autonomous driving technology. Some investors are expecting good news and are jumping into the stock ahead of that report.