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Tesla stock falls 8% due to Elon Musk’s price cut, which eats into quarterly profits

Tesla stock falls 8% due to Elon Musk’s price cut, which eats into quarterly profits

April 20, 2023 By Peter Leave a Comment

[TAG0][TAG1]

  • 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

Original article available on Business Insider

—————————————————————————————————————————————
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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Wedbush predicts that Tesla earnings will lead to a further 38% increase in the stock following the release of positive guidance by the EV manufacturer. Tesla’s price cuts are working according to Elon Musk – for now Tesla reports that Tesla vehicle deliveries rose by approximately 35 percent in the quarter ending March after price cuts Tesla’s stock is experiencing a wild ride. It has seen a dramatic rebound after its plunge in 2022. Here’s the timeline of all the drama surrounding Tesla’s stock, from Elon Musk’s Twitter wager to aggressive price cut strategies.

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