On Wednesday, Tesla (TSLA 3.88%) will report its third-quarter results. After announcing record third-quarter deliveries, expectations for the electric-car maker's financial performance during the period are high. Even more, a soaring stock price over the past year has raised the stakes for Tesla to keep growing its business rapidly.

Will the automaker be able to live up to the hype?

Ahead of the earnings report on Wednesday, some investors may be wondering whether or not they should buy shares of the growth stock before the update. After all, if Tesla announces better-than-expected revenue and earnings per share, the stock could jump.

To better understand whether the electric-car company's shares are attractive today, here's a quick earnings preview and an analysis of the stock's current valuation.

Tesla Model X interior

Model X. Image source: The Motley Fool.

Strong momentum

Earlier this month, Tesla said it delivered a record 139,300 vehicles during its third quarter. This was a huge jump from Q2 -- when the automaker's main vehicle factory temporarily forced to shut down because of the coronavirus. Vehicle deliveries surged 53% sequentially in Q3. However, growth was also impressive when compared to the year-ago quarter -- a period Tesla's operations were at full capacity. Deliveries soared 43% year over year.

In 2020, Tesla's business is benefiting from the launch of its new Model Y SUV earlier this year. As the company's most affordable vehicle yet, management expects Model Y sales to eventually rival sales of is Model 3 -- Tesla's best-selling vehicle.

Tesla Model Y

Model Y. Image source: Tesla.

Analysts expect Tesla's strong sales growth to lead to impressive top- and bottom-line growth, too. On average, analysts expect revenue to rise 31% year over year to $8.26 billion and non-GAAP (adjusted) earnings per share to jump 51% to $0.56.

Tesla stock: Buy, sell, or hold?

With Tesla's business firing on all cylinders, is Tesla stock a buy ahead of earnings?

The automaker's earnings report could, indeed, send the stock soaring following the report. But shares could just as easily crater if Tesla misses the mark in some area. It's simply too difficult to predict which direction the stock will move in the wake of the report.

Even more, an investment in the stock should be based on an investors' view of the company's long-term potential anyway -- not based on the results of a single quarter.

Zooming out beyond the current quarter, investors should note that Tesla stock's valuation already prices in massive growth over the next decade. The company has a market capitalization of more than $400 billion despite trailing-12-month revenue coming in at just $26 billion. Free cash flow, or excess cash flow left over after both regular operations and capital expenditures are taken care of, was just $800 million over this same period.

The market has arguably already priced in both continued leadership in electric cars and significant market share gains in the overall global auto market. Because so much optimism is already priced into the stock, I'd prefer a better entry point than $445 per share. Perhaps if investors get lucky and the stock falls below $400 following the earnings report then the stock might begin to look attractive.

For now, however, I'd rate Tesla stock a "hold" going into its earnings report on Wednesday. Of course, there's no guarantee Tesla stock will ever retreat to this level again. But I don't mind waiting on the sidelines, hoping for a more reasonable valuation.

Tesla's third-quarter earnings will be posted after market close on Oct. 21.