Tesla, Inc. (NASDAQ:TSLA) expect profit and positive free cash flow

Tesla, Inc. (NASDAQ:TSLA) expect profit and positive free cash flow

A big pile of debt comes due at Tesla March 1 – $920 million worth. But starting in two weeks, the company has a chance to make it disappear.

The debt is in the form of convertible bonds, a special kind of instrument that can be converted into shares of Tesla stock under certain conditions. If conditions are met, and all bondholders convert, Tesla would suddenly gain $920 million worth of much-needed financial flexibility.

To spark a conversion, Tesla needs to boost its stock price to $359.87 or higher at some point from Dec. 1 Feb. 28. The higher the price goes, the more likely holders will convert.

A successful conversion would go a long way toward helping Tesla meet CEO Elon Musk’s financial goals. He’s told stock analysts to expect profit and positive free cash flow in the upcoming quarter ending in December, with “aspirations” for profits in “all quarters going forward.”

In a November earnings call with analysts, Musk hinted at the possible introduction of an electric pickup truck. But more than ever Tesla investors seem more interested in hard financial results than visions of the future. One way to boost sales: Tesla has joined General Motors and Nissan to lobby Congress for an extension of the $7,500 federal tax credit on electric-car purchases, which begins running out for Tesla Jan. 1. If successful, a stock bump would almost surely follow.

The bond market is betting the strike price will be exceeded. The Tesla convertibles, which pay a slim interest rate of 0.25 percent, traded at $106.50 Wednesday. A price above $100 par value is a gamble that the bonds are worth more than their principal amount.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 317.31.

The projected upper bound is: 396.67.

The projected lower bound is: 315.59.

The projected closing price is: 356.13.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 9 white candles and 1 black candles for a net of 8 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 73.0832. This is not an overbought or oversold reading. The last signal was a sell 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.74. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 49 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 119.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 3 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed up 5.870 at 354.310. Volume was 30% below average (neutral) and Bollinger Bands were 14% wider than normal.

Open High Low Close Volume___
345.190 355.700 345.120 354.310 7,206,191

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 344.93 301.88 311.05
Volatility: 43 90 72
Volume: 6,342,030 10,312,412 9,146,433

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

TESLA INC is currently 13.9% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume into TSLA.O (bullish). Our trend forecasting oscillators are currently bullish on TSLA.O and have had this outlook for the last 17 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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