Tesla shares rebound on Thursday, some analysts do not see need for raising capital in near term

Tesla Inc surprised market players on Thursday with strong quarterly earnings and its ability to generate free cash flow. Some analysts on Wall Street even stated that they did not see a need for Tesla to raise capital in short term in order to support production of its Model 3.

Tesla shares closed higher for the sixth time in the past ten trading sessions on NASDAQ on Thursday. The stock went up 9.14% ($26.36) to $314.86, after touching an intraday high at $320.98, or a price level not seen since August 27th ($322.44).

Shares of Tesla Inc have risen 1.13% so far in 2018 compared with a 9.69% gain for the benchmark index, Nasdaq 100 (NDX).

In 2017, Tesla’s stock surged 45.70%, thus, it outperformed the Nasdaq 100, which registered a 31.52% return.

The electric car maker posted a net income of $311.5 million ($1.75 per share) during the quarter ended on September 30th, which compares with a loss of $619.4 million ($3.70 per share) in the year-ago quarter.

Teslas free cash flow was reported at $881 million during the past three-month period. It has been the first positive cash flow since Q3 of fiscal 2016 and a positive figure for only the third time in the companys historic record. The results were supported by an increase in Model 3s new production as well as a drop in capital expenses.

Tesla CEO Elon Musk once again pointed out that the company currently did not intend to raise equity or debt.

“We can actually be cash flow positive and profitable in all quarters going forward,” Teslas Musk noted.

Orders for the companys Model 3 in Europe and China would be taken before the end of this year, Tesla said. At the same time, Model 3 deliveries to Europe would begin in late February or March next year, while deliveries to China – during Q2.

“Assuming R&D spending is not delayed and Tesla is not forced to introduce a lower price (Model 3) prematurely to maintain volume, Tesla could be self-funded,” Jefferies analysts wrote in a note to clients, cited by Reuters.

“The Tesla investment case is about growth, not free cash generation, so we expect cash to be invested in growth and support current leverage if Tesla demonstrates sustainably positive free cash flow.”

According to CNN Money, the 30 analysts, offering 12-month forecasts regarding Tesla Inc’s stock price, have a median target of $299.50, with a high estimate of $530.00 and a low estimate of $100.00. The median estimate represents a 4.88% downside compared to the closing price of $314.86 on October 25th.

The same media also reported that 10 out of 31 surveyed investment analysts had rated Tesla Inc’s stock as “Hold”, while 8 – as “Buy”. On the other hand, other 8 analysts had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Tesla Inc (TSLA) are presented as follows:

Central Pivot Point – $265.40
R1 – $277.30
R2 – $294.60
R3 – $306.50
R4 – $318.40

S1 – $248.10
S2 – $236.20
S3 – $218.90
S4 – $201.60