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Tesla Crosses $100B Ahead of Q4 Earnings: ETFs in Focus

Sweta Killa

Tesla Motors TSLA is currently the most loved stock on the Wall Street. The stock has more than doubled in the past three months and become the first publicly listed U.S. automaker to cross $100 billion in market valuation - more than General Motors GM and Ford F combined. Globally, Tesla has become the second most valuable auto company behind Japan's Toyota Motor TM.

The latest surge was driven by analysts’ optimism and a Bloomberg report, which stated that the company has settled with Michigan a lawsuit challenging a state ban on direct-to-consumer. The settlement paves the way for it to open service centers in Michigan. Additionally, a surprise third-quarter profit, progress at a new factory in China and better-than-expected car deliveries in the fourth quarter are driving Tesla stock higher (read: Tesla Reports Record Q4 Deliveries: ETFs to Ride the Surge).

The trend is likely to be reflected in Q4 results as Tesla is expected to beat estimates when it reports on Jan 29 after market close.

Earnings Whispers

Tesla has a Zacks Rank #2 (Buy) and has an Earnings ESP of +3.34%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company saw solid earnings estimate revision of 39 cents for the to-be-reported quarter over the past 30 days. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The earnings track record is good for the company, which delivered four-quarter average positive earnings surprise of 271.43%. However, the Zacks Consensus Estimate for the fourth quarter indicates substantial earnings decline of 16.1% from the year-ago quarter.

Analysts have however become increasingly optimistic on Tesla ahead of its results with many of them revising their target price upward. Further, Tesla belongs to a top-ranked Zacks industry (in the top 27%) (read: Ride on Tesla's Hottest Run With These ETFs).

Given the bullishness, investors could tap Tesla in a basket form via ETFs having the highest allocation to this luxury carmaker. These funds could be the potential movers if Tesla delivers a positive surprise.

ARK Autonomous Technology & Robotics ETF ARKQ

This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 38 stocks with TSLA occupying the top spot with 13.4% share. The product has accumulated $182.6 million in its asset base and charges 75 bps in fees per year.

ARK Innovation ETF ARKK

This is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies (Genomic Revolution), industrial innovation in energy, automation and manufacturing (Industrial Innovation), the increased use of shared technology, infrastructure and services (Next Generation Internet), and technologies that make financial services more efficient. In total, the fund holds 39 securities in its basket with Tesla occupying the top position, accounting for 10.4% share. The product has gathered $2 billion in its asset base and charges 75 bps in fees per year from investors.

ARK Next Generation Internet ETF ARKW

This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 43 stocks in its basket with Tesla occupying the top position at 9.6%. The ETF has amassed $453 million in its asset base and its expense ratio is 0.75% (read: 10 ETFs Crushing the Market to Start 2020).

VanEck Vectors Low Carbon Energy ETF SMOG

This ETF tracks Ardour Global Index Extra Liquid, which focuses on the performance of low- carbon energy companies primarily engaged in alternative energy. It holds about 30 stocks in its basket with AUM of $110.2 million while charging 63 bps in fees per year. Tesla occupies the top position in the basket with 9.5% allocation. In terms of country exposure, the fund is skewed toward the United States with 71% share while Denmark and China round off the next two spots.

MicroSectors FANG+ ETN FNGS

This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, 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 share coming in at 10%. The product has accumulated $35.9 million in its asset base within two months of debut and charges 58 bps in annual fees (read: S&P 500 Hits New Highs: ETFs Soaring to Start 2020).

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