Tesla, Inc. (NASDAQ:TSLA) facing a growing cash squeeze
Elon Musk’s electric car challenger Tesla is facing a growing cash squeeze, and may need to raise fresh funding as debt repayments loom, according to analysis of its dwindling reserves.
The California-based manufacturer last week issued one of its most disappointing financial updates in years after redeeming nearly $1bn (£770m) in bonds.
The pressure from its $10bn debt pile is poised to grow over the coming months, starting with a $566m repayment due in November.
The so-called convertible notes could be paid in stock if Tesla shares were approaching $760.
This weekend Tesla shares stood below $250, close to a two-year low, after the carmaker revealed that it had lost $702m in the first three months of the year because of debt repayments and delays in the delivery of vehicles to customers.
This week the risk premium on Tesla’s debt spiked to the highest level in six months, with yields on bonds due for repayment in 2025 reaching 8.5pc on Thursday.
The company originally borrowed the cash to fund its rapid expansion as it prepared to manufacture its new Model X.
Its spending swelled from $914m in 2014 to $3.4bn in 2017 as it prepared to ramp up production for the Model 3, its first mass-market affordable car.
Tesla finally turned a profit for the first time in two years last October, and Mr Musk said in January he was “optimistic” the company would make money “in all quarters going forward”.
However, at the end of last year the company said: “There is no guarantee that we will have sufficient cash flow from our business to pay our substantial indebtedness.”
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 290.06.
The projected upper bound is: 257.80.
The projected lower bound is: 209.56.
The projected closing price is: 233.68.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 9.8137. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 15 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 28.48. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 157 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 -250.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.
Rex Takasugi – TD Profile
TESLA INC closed down -12.490 at 235.140. Volume was 151% above average (trending) and Bollinger Bands were 10% narrower than normal.
Open High Low Close Volume___
246.500 246.680 231.130 235.140 22,360,708
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 262.00 279.79 307.96
Volatility: 45 54 74
Volume: 11,308,883 9,807,044 9,298,774
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.
TESLA INC is currently 23.6% below its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect volume flowing into and out of TSLA.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on TSLA.O and have had this outlook for the last 10 periods. Our momentum oscillator is currently indicating that TSLA.O is currently in an oversold condition.