{"id":17773,"date":"2023-04-20T21:06:43","date_gmt":"2023-04-20T21:06:43","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/tesla-shares-sink-as\/"},"modified":"2023-04-20T21:08:36","modified_gmt":"2023-04-20T21:08:36","slug":"tesla-tumbles-as-investors","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/tesla-tumbles-as-investors\/","title":{"rendered":"Tesla tumbles as investors balk at Musk’s price-cutting spree"},"content":{"rendered":"

By Aditya Soni and Noel Randewich<\/p>\n

(Reuters) – Tesla Inc’s stock tumbled nearly 10% on Thursday after CEO Elon Musk signaled the electric vehicle maker will keep cutting prices to drive up demand, even after taking a painful hit to margins.<\/p>\n

The leading electric car manufacturer lost over $50 billion of its stock market value, while fears of an escalating price war also hit the shares of General Motors , Volkswagen AG and other automakers.<\/p>\n

At $517 billion, Tesla’s market capitalization ended Thursday below Meta Platforms’ for the first time since 2021.<\/p>\n

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GRAPHIC: Musk’s price war sinks Tesla shares to January low https:\/\/fingfx.thomsonreuters.com\/gfx\/mkt\/dwpkdlgjovm\/Pasted%20image%201682019892028.png <\/p>\n

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“Tesla\u2019s room to lower prices is not just limited to shrinking its superior margins; the EV maker seems conceptually ready to give away its hardware in the near-term in hopes of richly monetizing its software in a more distant future,” Deutsche analyst Emmanuel Rosner wrote in a client note.<\/p>\n

Tesla’s gross margins fell in the first quarter to the lowest in more than two years, missing Wall Street’s estimates after the company ignited a global price war in January to defend its dominance in the U.S. and make inroads in China, its second-largest market.<\/p>\n

Tesla’s automotive gross margin, excluding regulatory credits and leasing, stood at 18.3%, missing an ‘above 20%’ target provided in January by Tesla CFO Zachary Kirkhorn. <\/p>\n

Tesla has already slashed prices six times this year and Musk suggested more such cuts ahead, saying the company will put sales growth ahead of profit in a weak economy.<\/p>\n

“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and a higher margin,” Musk said. <\/p>\n

At least 15 analysts cut their Tesla price targets following Tesla’s report, pulling the median target of 42 analysts from $210 down to $200, or about 23% above the stock’s current level, according to Refinitiv data.<\/p>\n

Investors dumped automaker shares from Europe to the United States on fears that they too will sacrifice margins to maintain market share.<\/p>\n

Ford Motor Co and General Motors each lost about 3%, Lucid Group slumped about 7%.<\/p>\n

France-based Renault SA, whose finance chief said the company will not drastically cut prices on its EVs amid Tesla’s downward “spiral”, dropped 8%. Germany’s Volkswagen fell 3.1%.<\/p>\n

Tesla remains up 32% year to date, far outperforming the S&P 500’s 8% rise.<\/p>\n

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(Reporting by Aditya Soni in Bengaluru and Noel Randewich in Oakland, California, Additional reporting by Hyunjoo Jin; Editing by Shounak Dasgupta and David Gregorio)<\/p>\n

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By Aditya Soni and Noel Randewich (Reuters) – Tesla Inc’s stock tumbled nearly 10% on Thursday after CEO Elon Musk signaled the electric vehicle maker will keep cutting prices to drive up demand, even after taking a painful hit to margins. The leading electric car manufacturer lost over $50 billion of its stock market value, […]<\/p>\n","protected":false},"author":8,"featured_media":17774,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[1213],"tags":[1223],"class_list":["post-17773","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-u-s-business","tag-updated"],"jetpack_featured_media_url":"http:\/\/lynettelockhart.com\/client\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportBusinessNews\/tagreuters.com2023binary_LYNXMPEJ3J0K6-VIEWIMAGE.jpg","_links":{"self":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/17773","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/comments?post=17773"}],"version-history":[{"count":7,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/17773\/revisions"}],"predecessor-version":[{"id":18364,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/17773\/revisions\/18364"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media\/17774"}],"wp:attachment":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media?parent=17773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/categories?post=17773"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/tags?post=17773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}