Tesla, Inc. (NASDAQ:TSLA) shares rallied more than 20% in after-hours trading

Tesla, Inc. (NASDAQ:TSLA) shares rallied more than 20% in after-hours trading

Tesla, Inc. (NASDAQ:TSLA) shares rallied more than 20% in after-hours trading

Tesla Inc. shares rallied more than 20% in after-hours trading Wednesday after the Silicon Valley electric-car maker reported a surprise quarterly profit and said key projects, including the next vehicle in its lineup, were ahead of schedule.

Tesla TSLA, -0.35%  said it earned $143 million in the third quarter, or 80 cents a share, compared with $311 million, or $1.82 a share, in the year-ago quarter.

Adjusted for one-time items, Tesla earned $342 million, or $1.91 a share, compared with adjusted earnings of $3.02 a year ago.

Revenue fell to $6.30 billion from $6.82 billion in the year-ago period.

Analysts polled by FactSet expected an adjusted loss of 46 cents a share on sales of $6.43 billion for the quarter.

The stock zoomed past $300 in after-hours trading. It traded as low as $251.35 in the regular session.

The results were much better than expected, but Tesla has been there before, said Garrett Nelson, an analyst with CFRA.

“We think questions remain regarding the sustainability of these results, particularly as EV competition ramps up and its tax credit goes away,” he said.

In a call with Wall Street analysts following results, Tesla executives reiterated that both the “gigafactory” in China and the Model Y, Tesla’s next vehicle, are ahead of schedule; reaffirmed the goal to remain in the black; and said they believe the Model Y, which will be more profitable, won’t cannibalize Model 3 sales.

Chief Executive Elon Musk also said that the company will unveil a third iteration of its solar roof on Thursday, and called Tesla’s energy business the company’s least appreciated unit.

Production of the Model Y, a compact SUV, is now seen starting in the summer of 2020, from a previous expectation of fall 2020. The Shanghai plant is “ready for production” and a “trial production” of the Model 3 there has started, Tesla said in its letter to shareholders.

Investors had braced for a drop in quarterly sales despite an uptick for deliveries, mostly thanks to a mix of deliveries that skewed heavily toward the Model 3, Tesla’s cheapest vehicle.

Tesla moved to dispel some of the concerns about margins, saying that despite “reductions in the average selling price (ASP) of Model 3 as global mix stabilizes, our gross margins have strengthened” while expenses were at its lowest since the start of Model 3 production.

“As a result, we returned to GAAP profitability in Q3 while generating positive free cash flow. This was possible by removing substantial cost from our business,” the company said.

Tesla pinned the revenue miss on the percentage of leased vehicles, which has tripled, it said.

Tesla also called for GAAP profits and free cash flow going forward with “possible temporary exceptions” around the launch and production ramp of new products. “Continuous volume growth, capacity expansion, and cash generation remain the main focus,” Tesla said.

The company earlier this month reported third-quarter deliveries, its proxy for sales, that fell short of expectations. Tesla said it delivered about 97,000 vehicles in the third quarter, including 79,600 Model 3 sedans. The car maker delivered 84,000 vehicles in the third quarter of 2018, including about 56,000 Model 3’s.

Tesla said Wednesday it was “highly confident” in selling more than 360,000 vehicles in 2019. That will mean that it needs to deliver at least 105,000 vehicles in the fourth quarter. In the past, the company has spoken of selling between 360,000 and 400,000 vehicles in the year.

Earlier Wednesday, Ford Motor Co. reported third-quarter revenue and adjusted profit above Wall Street expectations, but lowered its outlook on increased headwinds in the fourth quarter, including lower volumes in China and higher-than-planned sales incentives in North America.

Tesla shares have lost about 23% this year, and 13% in the past 12 months. That contrasts with gains of 20% and 15% for the S&P 500 index SPX, +0.28%  and the Dow Jones Industrial Average DJIA, +0.17%  this year, respectively, and advances of 10% and 7% for the indexes in the past 12 months.

Technical Indicators

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 242.77.

The projected upper bound is: 272.72.

The projected lower bound is: 237.42.

The projected closing price is: 255.07.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 30.1827. This is not an overbought or oversold reading. The last signal was a sell 3 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 58.42. 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 sell 63 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 35. This is not a topping or bottoming area. The last signal was a sell 3 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 buy 9 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed down -0.900 at 254.680. Volume was 50% above average (neutral) and Bollinger Bands were 12% narrower than normal.

Open     High      Low     Close     Volume___
254.500 256.140 251.350 254.680 11,216,182
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 254.99 236.48 253.66
Volatility: 27 48 57
Volume: 6,969,429 6,984,535 9,024,114

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 0.4% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into TSLA.O (mildly bullish). Our trend forecasting oscillators are currently bullish on TSLA.O and have had this outlook for the last 31 periods.

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