I hadn't checked the stock price lately. I almost wish I hadn't. Down to 277! Here are what analysts are saying.
"The sooner-than-expected $35,000 Model 3 announcement, "rather than reflecting dramatic progress on manufacturing and distribution costs, likely reflects the need to replenish cash after the convert repayment, perhaps exacerbated by the weak first two months of U.S. sales," the Barclays analysts said."
"Moreover, "gross margins will now be appreciably lower, and thus a significant amount of additional volume is needed to offset price cuts even considering the cost saves," they said."
"'Something just doesn't add up,' says Morgan Stanley analyst"
'Adam Jonas at Morgan Stanley said in a note Tuesday that investor feedback on Tesla has been "firmly in the 'something's wrong' camp rather than 'this is a great buying opportunity' camp."'
'“We believe there has been a fall-off in U.S. demand and softer-than-expected demand in Europe/China,” they said in the Sunday note. “Price cuts on the Model S/X/3 globally supports the view that overall demand has softened.”'
We will see if the Tesla stock price recovers once the model Y is actually unveiled.
Sedan sales have been soft for quite a long time in the US. Americans want SUV/crossover vehicles with more cargo space and functionality. I'm a bit surprised actually that Tesla released the Model 3 before the Model Y considering this.
I've seen the argument that Tesla is lowering prices because they have a target margin % and as long as they can reach that % they are more than happy to go the Amazon/Costco route and cut prices relentlessly.
That just doesn't seem to jive with Tesla on previous earnings calls talking about the great profitability of the higher tier versions of the Model-3 and how much it contributed to a profitable/successful quarter.
The most likely theory is the most obvious one. Demand for Model 3, at least at price tiers Tesla have previously offered has been met. Despite all the bluster around 400K in pre-orders it looks like less than 50% of those have been converted into sales and it's a legitimate question how many pre-orders remain and if those customers are serious about buying one or simply forgot to cancel their reservation.
I expect the $35,000 with tax incentives to be a phenomenal car for the $$ but it's still expensive for the segment (average sedan price of accord/camry/etc probably around $26,000). Median new "car" purchase is I believe $34,000 but that includes a metric *sugar*-ton of SUV and light truck sales which are scale topping cars cost-wise.
I have found it is very difficult to have a rational discussion around this topic in the larger investment threads because they are almost entirely populated with Tesla/environmentalist cultists and they appear to be completely ensconced in a reality distortion field.
I pitched the idea of a $35,000 Model 3 to two friends who have ridden with me in my $62,000 (well a lot cheaper than that now, ha ha joke's on me) dual motor version.... both of them said the price was "better" (with Colorado tax credits the car would be less than $27,000 base price) but both of them also expressed nervousness about Tesla as a company/brand. News about closing your retail stores leaves many consumers nervous about the future of the company.
When prices get cut month after month it leaves a lot of customers waiting the company out to see how far the discounts will go. That does not mesh whatsoever with a company that is trying to position themselves as a luxury brand, so I assume Tesla no longer aspires to being an Apple type company for EV segment.
