Our popular Earnings Explorer tool has quarterly earnings results and share price reactions to those earnings reports for nearly every US stock going back to 2001. The database is online, massive, and it’s interactive so that users can quickly look up historical results for individual companies. One way to use the database is to see how stocks that are set to experience huge opens higher on earnings typically trade from the open to the close of trading after their initial moves higher. Two stocks that are set to gap up sharply on earnings this morning are Facebook (FB) and Tesla (TSLA). At the moment, both are set to open higher by more than 5%.
Below we have pulled all historical instances in which both Facebook and Tesla have gapped higher by at least 5% at the open of trading following quarterly earnings reports. Coincidentally, each stock has had 11 prior gaps up of 5%+ on earnings in their history as public companies. For Facebook (FB), when it has gapped up 5%+ in the past, it has actually traded lower from the open to the close 7 of 11 times for an average open to close change of -0.91%. This tells us that at least in the past, investors have more often than not used these opportunities to lighten up on shares during the regular trading day.
For Tesla (TSLA), when it has gapped up 5%+ on earnings, the stock has also traded down from the open to the close more often than it has traded up from the open to the close, but its average open to close change on these 11 prior gaps higher has been positive at +0.46%. We’d note that this will be the third quarter in a row that TSLA has opened higher by 5%+ on earnings, and the prior two quarters saw a slight positive move from the open to the close for the stock. If you’d like to test out our Earnings Explorer tool to see how your stocks typically trade on earnings, start a two-week free trial to Bespoke Institutional. You’ll also gain access to our entire platform that includes our most actionable research reports and our full suite of investor tools.