Tesla will soon release its third-quarter earnings report for 2025, and expectations are high. Analysts predict earnings of $0.55 per share, a 37.5% increase from the last quarter. Revenue is estimated to reach $26.46 billion, up 18%. However, what Tesla says about its future is critical for how investors view the company’s growth potential. There are signs that challenges may be on the horizon. Since late 2024, Tesla has been producing more vehicles than it sells, leading to a buildup in inventory and suggesting possible waning demand. Revenue growth dropped in Q2 2025 and has been slowing down since Q3 2024. Additionally, earnings before taxes have decreased by roughly 11% each quarter since Q3 2024. Supply chain issues have also arisen due to export restrictions on rare-earth materials from China. Tesla’s stock price is currently fluctuating between $411.60 and $448.20. This range helps gauge market sentiment. If the stock breaks above this range, it could signal renewed investor confidence. Conversely, a failure to do so may indicate that the growth story is weakening. Investors are paying close attention to Tesla’s earnings as the company navigates challenges like rising interest rates, increased competition, and changing global demand. Tesla is expected to reveal its earnings today, October 22, 2025. We anticipate a notable change in stock price. Although expected earnings for Q3 look promising, implied volatility on short-term options is over 90%. This suggests that traders are bracing for a surprise. The company’s guidance will be crucial; a positive forecast could lift the stock out of its current range, whereas any hint of weakness may confirm concerns about declining growth. High interest rates have made it more costly for consumers to finance new vehicles, with the Federal Reserve maintaining a federal funds rate of 5.5% through September 2025. If the forecast disappoints, the stock might test the lower range at $411.60, making long put strategies or bear put spreads attractive. On the other hand, if management presents an optimistic growth outlook, it could lead to a significant short squeeze. A solid plan to address rising inventory, which increased to 18 days in Q3 2025 from single digits in 2023, could trigger this response. In that case, we would look for a breakout above $448.20, making bull call spreads a promising option for a potential rise toward the previous high of $470.54. It’s important to consider the competitive landscape affecting market positioning beyond this week. BYD has emerged as a significant competitor, commanding over 35% of domestic EV sales in China. Moreover, global EV sales growth has slowed to 15% year-over-year, down from more than 30% in 2024. This ongoing competition means that even a positive earnings report may not result in a sustained rally, as traders remain wary of long-term margin compression. Due to the uncertain nature of this event, strategies that benefit from significant price movements in either direction, like long straddles or strangles, may be prudent for the immediate post-earnings volatility. After the initial reaction, we will monitor to see whether a new trend develops outside the current trading range. The direction it takes will influence our options strategy for the rest of the fourth quarter.

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