Tesla Drops After Price Cuts, More Pain to Come?

Tesla announced a new wave of price cuts on Friday after the company’s Q3 deliveries missed Wall Street’s estimates. Likely in its quest to keep demand high, Tesla reduced prices of some of its Model 3 and Model Y versions, sending the company’s shares lower at the market open. 

Tesla Cuts Prices Again After Weak Q3 Delivery Report

Tesla’s shares tumbled 2.3% at the Friday market open after the world’s most valuable automaker announced the latest batch of price cuts. 

Notably, Tesla reduced prices of some of its Model 3 and Model Y versions in the US to spur demand after previously missing expectations for Q3 deliveries. Following the adjustments, the official website shows that the starting price for Tesla’s Model 3 is now $38,990, down from $40,240. 

The long-range Model 3 version’s price has been cut from $47,440 to $45,990, while the Model 3 Performance fell from $53,240 to $50,990. Similarly, the company’s Model Y Performance is now priced at $52,490, down from $54,490. 

The move comes in response to Tesla’s recent Q3 report, which showed that the automaker delivered 435,059 in the quarter, missing analysts’ estimates and down from the previous quarter. The company blamed the decline on the planned factory downtimes at the Giga Shanghai and Giga Texas plants. 

It is also the latest in a series of price cuts for Tesla. The car manufacturer began reducing prices of its vehicles late last year to spark a demand rebound amid concerns over sluggish consumer spending and intensifying competition in the electric vehicle (EV) space. 

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Tesla’s 2023 Rally Impressive, But Risks Arise as Fed Reiterates Hawkish Stance

From a stock performance standpoint, today’s decline has a minor impact on Tesla’s remarkable 2023 ascent. In particular, TSLA surged by more than 135% year-to-date, making it one of the seven stocks most responsible for the S&P 500’s rally.

However, investors have been increasingly defensive lately regarding risk assets, mainly because of the Federal Reserve’s recent message about its plan to keep interest rates higher for longer. The main reasons behind the Fed’s persisting hawkishness include stubborn inflation and the incredibly resilient US economy. On Friday, the new non-farm payroll (NFP) report showed that job additions hit 336,000 in September, nearly twice the economists’ estimates.

Meanwhile, Cathie Wood’s Ark Investment Management sold $25.5 million worth of Tesla shares on Wednesday, the company’s daily trade disclosure revealed, followed by another minor sale a day later. 

Do you think TSLA will give up some gains in the coming months if the Fed delivers another rate hike? Let us know in the comments below.