Is Tesla Stock a Buy Ahead of Earnings?

Banks kicked off earnings season nicely last week, with results largely coming in better than anticipated. But investors are still waiting to see how companies in many other major industries are performing. One company reporting earnings this week that investors will be watching closely is (NASDAQ: TSLA). A big question looms: Can the report live up to the stock's incredible 128% year-to-date gain? Or could the update disappoint investors?

As earnings approaches, some investors may wonder whether they should buy shares of the growth stock. While it's impossible to know how the stock will fair following Tesla's earnings release on Wednesday, there are several good reasons to refrain from buying it beforehand.

We already know Tesla delivered an impressive number of vehicles in Q2. In its quarterly update on vehicle production and deliveries, the electric-car maker said it delivered a record 466,140 vehicles to customers during the quarter. This was up 10% sequentially and 83% year over year. But Tesla had to lower the price of vehicles significantly earlier this year to solicit this demand in a high interest rate environment. Some Tesla models saw price cuts as steep as 20%. This means that Tesla's profit will not grow in step with its revenue for Q2 due to lower margin on each vehicle than in the year-ago period.

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Source Fool.com