fbpx

Join our community of traders FOR FREE!

  • Learn
  • Improve yourself
  • Get Rewards
Learn More

Tesla shares fall the most in six weeks on Friday, company launches cheaper, shorter-range Model 3, plans to sell vehicles on-line only

Tesla Inc (TSLA) has finally launched the long-awaited standard version of its Model 3 sedan at a price of $35 000. The base version of the vehicle will have a range of 220 miles, will achieve a top speed of 130 Miles per Hour and will accelerate from 0 to 60 Miles per Hour in 5.6 seconds, according to specifics revealed by the US electric car maker.

Tesla shares closed lower for the fifth time in the past ten trading sessions on NASDAQ on Friday. It has also been the steepest daily loss since January 18th. The stock went down 7.84% ($25.09) to $294.79, after touching an intraday low at $291.90, or a price level not seen since February 26th ($288.77).

Shares of Tesla Inc have retreated 11.42% so far in 2019 compared with a 12.98% gain for the benchmark index, Nasdaq 100 (NDX).

In 2018, Tesla’s stock went up 6.89%, thus, it outperformed the Nasdaq 100, which registered a 1.04% loss.

The new Model 3 will now cost less compared to its gasoline-powered counterparts, including the BMW 3 Series ($40 000), Mercedes C Class ($41 000) and Audi A4 ($37 500).

However, in order to save costs on its low-priced Model 3 version, Tesla intends to shut down the majority of its 250 stores and shift vehicle sales to on-line entirely. At the same time, the company said that drivers would be given up to one week to return their newly bought vehicles in case the latter do not meet their preferences.

“We will be closing some stores, some reduction in headcount as a result — there’s no question about that. I wish there was some other way. Unfortunately, it will entail a reduction in force on the retail side. There’s no way around it,” Teslas Chief Executive Elon Musk was quoted as saying by CNBC.

The decision triggered a cannonade of reactions by analysts on Wall Street.

“We do not think this was the original plan envisaged by Tesla management and bullish investors,” J.P. Morgan analysts wrote in a client note, cited by Reuters.

“The Model 3 would prove more difficult and more expensive to manufacture than was originally projected, such that the firm would struggle to earn its targeted above industry average 25 percent gross margin as it transitions toward industry average pricing,” the analysts also noted.

A cheaper Model 3 is considered key to Tesla’s viability in a longer term, since it requires a larger number of customers who can afford cheaper vehicles so that slowing sales of more expensive sedans are offset.

Tesla also said that it now projected a loss during the first quarter. It had previously expected to remain profitable during the entire 2019.

According to CNN Money, the 28 analysts, offering 12-month forecasts regarding Tesla Inc’s stock price, have a median target of $337.50, with a high estimate of $530.00 and a low estimate of $200.00. The median estimate represents a 14.49% upside compared to the closing price of $294.79 on March 1st.

The same media also reported that 10 out of 29 surveyed investment analysts had rated Tesla Inc’s stock as “Buy”, while 7 – as “Hold”. On the other hand, 8 analysts had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Tesla Inc (TSLA) are presented as follows:

Central Pivot Point – $301.19
R1 – $313.60
R2 – $332.42
R3 – $344.83
R4 – $357.25

S1 – $282.37
S2 – $269.96
S3 – $251.14
S4 – $232.33

TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

Related News