Tesla, Inc. (NASDAQ:TSLA) Soars on Strong Results

Tesla, Inc. (NASDAQ:TSLA) Soars on Strong Results

Tesla, Inc. (NASDAQ:TSLA) Soars on Strong Results

Expectations were pretty high for Tesla going into its Q4 report, but the company managed to top them.

On Wednesday afternoon, Elon Musk’s company reported Q4 revenue of $7.38 billion (up 2% annually), GAAP EPS of $0.58 and non-GAAP EPS of $2.14, beating consensus analyst estimates of $6.99 billion, $0.51 and $1.77.

n addition, Tesla said it expects its 2020 vehicle deliveries “should comfortably exceed 500,000 units.” That compares with 367,500 2019 deliveries, and is above a consensus for 467,000 deliveries.

As of the time of this article, Tesla’s stock, which was already up 128% from the time of its Q3 report going into its Q4 report, is up 11.8% in after-hours trading to $649.23. Tesla’s market cap is now above $115 billion, and its enterprise value (market cap plus net debt) is around $125 billion.

Here are some notable takeaways from Tesla’s earnings report and call.

1. Tesla Is Moving Up the Start of Model Y Deliveries

Tesla now plans to start deliveries for the relatively inexpensive Model Y crossover by the end of Q1, rather than (as forecast in October) in the summer of 2020. When the Model Y was first unveiled last March, Tesla indicated deliveries would start in the fall of 2020.

Tesla has previously said that it will start producing the Long Range and Performance versions of the Model Y this year, and begin making the less costly Standard Range version next year.

2. Free Cash Flow Was Much Better Than Expected

Q4 free cash flow (FCF) was $1.01 billion, up from $371 million in Q3 and $910 million in the year-ago period, and well above a consensus of $429 million. Helping out: GAAP operating expenses were roughly flat annually at $1.03 billion, and capital spending (though up 27% to $412 million due to Shanghai Gigafactory investments) was also less than expected.

Tesla reiterates that it expects to produce positive quarterly FCF and GAAP net income going forward, “with possible temporary exceptions, particularly around the launch and ramp of new products.” The company ended Q4 with $6.3 billion in cash and $13.4 billion in debt.

3. Tesla Expects Solar and Energy Storage Deployments to Each ‘Grow at Least 50%’ in 2020

The outlook follows a 2019 in which Tesla’s solar deployments continued falling as the company worked to improve its solar business’ cost structure, and in which its energy storage business saw healthy growth amid growing sales of Powerpack and Powerwall systems.

In Q4, Tesla’s solar deployments fell 26% annually to 54 MW, while its energy storage deployments (can be a little lumpy based on deal timings) grew 136% to 530 MWh.

4. Tesla Is Further Upping its Chinese Model 3 Production

“Due to strong initial customer response in China, our goal is to increase Model 3 capacity even further using existing facilities,” Tesla says in its report, while adding that it has “already broken ground” on the next phase of its Shanghai Gigafactory.

Tesla added that it plans to start Shanghai Model Y production in 2021, and that it’s “planning for [Shanghai] Model Y capacity to be at least equivalent to Model 3 capacity.”

5. Automotive Gross Margin Fell a Bit

With reduced tax credits and the sale of lower-cost Model 3 trims weighing on margins some, Tesla’s GAAP automotive gross margin (GM) fell to 22.5% from 22.8% in Q3 and 24.3% in Q4 2018.

On a non-GAAP basis, which excludes regulatory credits, Tesla’s automotive GM was 20.9%, compared with 20.8% in Q3 and 23.2% in the year-ago period.

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 464.94.

The projected upper bound is: 690.20.

The projected lower bound is: 602.96.

The projected closing price is: 646.58.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 30 white candles and 19 black candles for a net of 11 white candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 11 rising windows in the last 50 candles–this makes the current rising window even more 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 78.6142. This is not an overbought or oversold reading. The last signal was a sell 4 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 83.62. This is where it usually tops. 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 sell 45 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 193.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. 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 32 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed up 59.820 at 640.810. Volume was 149% above average (neutral) and Bollinger Bands were 123% wider than normal.

Open     High      Low     Close     Volume___
632.420 650.880 618.000 640.810 29,005,676
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 562.45 429.18 289.90
Volatility: 69 57 60
Volume: 19,116,178 13,403,328 10,415,393

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 gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
TESLA INC is currently 121.0% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 29 periods. Our momentum oscillator is currently indicating that TSLA.O is currently in an overbought condition. 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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