But although the price increase to $ 359.87, which is necessary for a swap, may be a long step, this is not excluded for stocks that are prone to strong fluctuations. And due to the fact that the manufacturer of electric vehicles plans to report on the income of the fourth quarter overnight, the catalyst may be just around the corner.
"There is always a glimmer of hope," said Chris Hartman, senior portfolio manager, specializing in convertible arbitration at Aegon Asset Management.
"Given the volatility that may occur within these stocks, the market clearly states that these stocks can reach, approach, or exceed $ 360."
Indeed, Tesla shares were trading at $ 376 in December, helped by huge gains in the third quarter, and a message from Bloomberg that China is moving towards lowering its trade tariffs on US-made imported cars.
A California-based company in Palo Alto reduced concerns about the upcoming debt maturity by placing a free cash flow of US $ 881 million for the three months ended September 30, adding credibility to General Director Musk’s statement that money to pay. from bonds.
Some analysts still doubt that this is plausible. Tesla could end the year with cash in the amount of about 2.6 billion US dollars, including an additional 2 billion US dollars from external capital, UBS analyst Colin Langan expects to receive in 2019.
According to the report on Monday, the capital will be used to support the ramp model 3, the construction of a plant in China and the planned production of models Y and Semi in 2020. Langan has a stock sale rating and lowered the target price to $ 220 from $ 230.
But the beginning of 2019 brought a flood of bad news, which led to a drop in stocks of more than 20 percent from their December highs, to about $ 296 to close on Monday.
Musk announced plans to fire 7 percent of Tesla’s workforce, warning that “the road ahead is very difficult” to make his Model 3 sedan more accessible to the masses. The company has reduced prices and production on some of its vehicles. And trade tensions with China have not improved yet.
Now Musk must reassure investors that Tesla can increase production so that Model 3 at a price of $ 35,000 ($ 48,750) would still be profitable. According to a January 18 blog post, the cheapest configuration currently available cost $ 44,000.
In connection with the impending maturity of debt analysts will use the report of the environment to look at the money Tesla. According to a Bloomberg survey, it is expected that in the fourth quarter it will bring 411.5 million US dollars.
As of September 30, Tesla had about $ 3 billion in cash and cash equivalents, which would be more than enough to cover the principal amount of $ 920 million and interest in the amount of $ 1.15 million on convertible bonds.
Musk has already said that he plans to pay off the debt and not refinance it.
Judging from the data on the company's supply in the fourth quarter, the company's cash at the end of 2018 could be from 3.5 to 4 billion dollars, said analyst at CreditSights in New York, Hitin Anand.
“They have cash, but they would prefer to convert people,” said Anand. "Will this put them in trouble?" Not. But it will not be perfect. ”