Tesla Inc saw a 4 per cent drop in its shares price on Monday following the company’s global price cuts, raising concerns on Wall Street about shrinking margins at the electric-vehicle maker just ahead of its earnings report later this week.
The company reduced prices by as much as $2,000 on vehicles like the Model 3 and Model Y in several key markets, including the U.S., China, and Germany, over the weekend. This move comes as Tesla aims to stimulate demand that has been dampened by high interest rates.
Investors are keenly awaiting the company’s quarterly earnings report, scheduled for Tuesday, with expectations that the world’s most valuable automaker will report its first revenue decline and lowest gross margin in nearly four years, according to LSEG data.
Tesla’s CEO, Elon Musk, recently made headlines by laying off 10% of the company’s workforce, emphasising a shift towards autonomous driving as a “blindingly obvious” move.
Addressing recent speculations, Musk announced an event in August to reveal Tesla’s “Robotaxi,” following a Reuters report on April 5 suggesting the company had abandoned plans for its long-awaited affordable EV in favor of focusing on robotaxis. Musk countered the report by stating that “Reuters is lying,” although he did not provide specific details about any inaccuracies.
In light of this, Dan Ives, an analyst at Wedbush Securities, described the upcoming earnings report as a “moment of truth,” highlighting its significance in the company’s history.
Tesla’s shares were trading at $141.1 on Monday, representing a 41% decline in value so far this year. Surveys and experts suggest that Musk’s political inclinations and controversial public statements have deterred some potential buyers of Tesla vehicles.
The drop on Monday was expected to wipe out nearly $20 billion from Tesla’s market value of $468 billion, based on its total outstanding shares.
While Tesla remains the world’s most valuable automaker, Toyota (7203.T) has been steadily closing the gap, driven by strong demand for its hybrid vehicles. Toyota’s market capitalisation stood at $306.41 billion as of its last close.
Read more on Tesla set to lay off 15,000 employees, over 10% of global workforce