Tesla Shares Might Drop Further on More Price Reductions in China
Tesla, Inc. (TSLA) shares could face further decline on Friday as the company announced additional price reductions for its Model 3 electric vehicles in China. Despite investor hopes that such profit-hurting moves would cease, Tesla lowered the prices of its vehicles by 2-5% on Friday.
Gary Black, an analyst from Future Fund, shared that analysts might now decrease their estimate of Tesla’s 2024 earnings by $1 billion or 25-30 cents per share. Furthermore, he lowered his own estimate of Tesla’s 2024 earnings by 7% from $4.90 to $3.90 per share.
To compound the situation, Black does not anticipate that these price cuts will result in increased car sales for Tesla. He believes that other Chinese car companies will also lower their prices, further impacting Tesla’s market share. The combination of these new price cuts and the reduced earnings estimate is likely to cause Tesla’s stock to drop on Friday, according to Black.
Black predicts that Tesla will sell 756,800 cars in China in 2024, compared to 605,500 cars sold in 2023. He also estimates that about 90% of these sales will be the Standard Range version of the Model 3.
This news comes after Tesla reduced prices globally in 2023, resulting in lower profits and disappointing investors. It was hoped that profits would improve in 2024, but these new price reductions cast doubt on the company’s ability to achieve that goal.
In premarket trading, Tesla stock fell by 3% to $220.40, according to Benzinga Pro data. On Thursday, the stock lost 2.87%, closing at $227.22, the lowest point since mid-November. Year-to-date, Tesla’s stock has lost 8.6%, erasing a portion of the 101% gain it experienced in 2023.
Investors and analysts will be closely monitoring Tesla’s performance in the coming days to determine the impact of these price reductions and adjust their future expectations accordingly.
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Related Link: ‘Credits To The Tesla Team:’ Elon Musk Applauds His Workers As EV Giant Eclipses Legacy Automakers’ Sales Growth Over 8 Years
