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- Tesla shares fell by 8% on Thursday in premarket trade after disappointing earnings.
- The EV manufacturer met the first-quarter revenue target set by analysts, but reported lower profit margins.
- Elon Musk slashed prices on Tesla's flagship models in an effort to increase market share.
Tesla shares fell in premarket trade on Thursday, after the electric vehicle maker revealed that its aggressive price reductions eroded profit margins during its last quarter.
Tesla's earnings for the first quarter fell short of Wall Street expectations. Shares dropped 8% and traded at $167 just before the opening bell.
According to Refinitiv, the automaker reported earnings per share ($0.85) and revenues of $23.33 Billion, which are both in line with analyst's estimates.
Its net income fell by 24% on an annual basis to $2.51 Billion during the three-month period ending March 31.
Tesla's margins are shrinking in part due to its aggressive price cuts of popular cars, including the Model 3 & Model Y in the last quarter in an attempt to increase market share.
Elon Musk, the CEO of Tesla Motors, said on Wednesday that he does not expect his company to stop lowering its prices for its most expensive vehicles any time soon.
He said that the price reductions were a great opportunity to expand our lead. We will continue to invest as quickly as possible in growth.
Analysts say that Musk's price-war could increase Tesla's market share in the long term, but analysts also believe it will not be well received by Wall Street if further cuts are made to its profits.
Russ Mould, AJ Bell's investment director, said on Thursday that the electric vehicle giant Tesla was facing a dilemma.
He added, "Right away, it appears that the company is prioritizing its competitive position over protecting profitability. Only time will tell whether this is the right decision."
Read More: The price of Teslas is lower than ever before, and this is causing a headache to the entire automotive industry
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By: gglover@insider.com (George Glover)
Title: Tesla stock slides 8% as Elon Musk’s price cuts eat into quarterly profits
Sourced From: markets.businessinsider.com/news/stocks/tesla-stock-elon-musk-price-cuts-market-news-model-y-2023-4
Published Date: Thu, 20 Apr 2023 09:22:22 +0000
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