The Tesla stock and the YieldMax TSLA Option Income Strategy ETF (TSLY) will be in the spotlight this week as the company publishes its financial results. 

Tesla (TSLA) was trading at $328, up 54% from its lowest point this year, while the TSLY ETF jumped 50%. This article explores whether the ETF is a good buy ahead of Tesla earnings.

Tesla is facing major challenges

The TSLY ETF will be in the spotlight this week as Tesla publishes its results, which analysts expect will be weak. 

A recent report showed that the company produced 410,244 vehicles in the second quarter and delivered 384,122. In contrast, the company made 410,831 vehicles and delivered 443,956 in the same period last year.

These results are a sign that the company is facing major challenges in its key markets. For example, in China, its crucial market, it is facing substantial competition from some of the top companies it inspired. 

Many companies like Nio, XPeng, Li Auto, and BYD have continued to have double or even triple-digit growth rates in the country. For example, XPeng delivered over 103,181 vehicles in Q2 and 197,189 in the year’s first half.

Similarly, Li Auto sold 36,279 vehicles in June and 111,074 in the second quarter. BYD and other firms continued publishing strong financial results during the quarter. 

Tesla has also lost market share in Europe, where local brands such as Renault and BMW are gaining market share in the EV market. This trend will likely continue as the trade conflict between the US and the EU continues. 

The US market is also not doing all that well, a trend that may continue now that Trump has signed the Big Beautiful Bill into law. That bill will remove the popular EV incentive. 

TSLA earnings ahead

Therefore, analysts anticipate that Tesla’s revenue will come in at $22.7 billion, down by 10.97% from a year earlier. Its earnings per share (EPS) is expected to come in at 44 cents, down from 52 cents a year ago. Tesla has missed its earnings estimates in the last two consecutive quarters.

Analysts expect the annual revenues to come in at $96.9 billion, a 0.73% drop from the $97.6 billion it made a year earlier.

Tesla stock price will react to more updates on its robotaxi business, which it is pegging its growth on. It will also respond to news about its Indian business, which it recently entered. 

Is TSLY ETF a better alternative to Tesla stock?

Tesla stock price trades at $329, up from the average estimate of $306. As such, there are concerns that the stock will continue to underperform the market as its sales growth stalls. 

Therefore, some analysts believe that the TSLY ETF is a better alternative to Tesla stock this year. Besides, the fund has a dividend yield of about 123%, higher than most companies.

TSLY generates its yield by investing in Tesla shares and then applying a covered call approach. In this strategy, the company sells call options on the stock and then generates a return in the form of its premiums.

The TSLY ETF has outperformed Tesla stock this year. Its total return has dropped by 14% this year, compared to Tesla’s minus 18%.

However, historically, TSLY’s total return as been weaker than Tesla. Its total return in the last 12 months was 12%, much lower than TSLY’s 12%.

TSLY vs TSLA ETF stock chart

Therefore, one of the best approaches for Tesla fans is to buy both. While the stock may provide growth, the ETF will provide monthly payouts.

Read more: Tesla stock price forecast and why it may crash soon

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