- Tesla significantly decreased pricing in Hong Kong.
- On Wednesday, TSLA stock fell 3.4%.
- On CPI news, the NASDAQ fell by 0.9%.
The shares of Tesla (TSLA) fell 3.4%, marking the lowest day for the company in about three weeks. The market believed Tesla is still concerned about weak demand because of news that the top manufacturer of electric vehicles was lowering pricing in Hong Kong. The year started out with a lot of price reductions for all of Tesla’s models.
The Consumer Price Index (CPI) for March was also released early on Wednesday, although it was insufficient to raise spirits. Although core inflation was in line with predictions and headline inflation coming in below estimates, which initially spurred a wave of purchasing, many analysts predicted the Federal Reserve would still hike rates slightly at the May FOMC meeting. NASDAQ decreased by 0.9% during the session.
Tesla stock news: Price reductions will negatively impact the prospects for gross margin
A Hong Kong newspaper reported on Wednesday that Tesla would reduce the cost of the Model 3 Performance edition in China by 14.7%. A 11% cut will be made to the long-range Model 3, while a 9% cut will be made to the Model Y. These cuts are in addition to those made in January and won’t take effect until April 15.
The major lesson is how this will affect future gross margins. On April 19, Tesla releases first-quarter financial results. Wall Street anticipates that the company will report adjusted earnings per share of $0.85 on revenue of $23.38 billion, but the market will be asking questions about these recent pricing decreases. Deliveries in the first quarter already fell short of market expectations, and 14 different times, analysts have lowered their Q1 EPS forecasts. In the 90 days prior, only one analyst raised their EPS forecast.
Tesla stock prediction
Tesla stock is up roughly 1.2% in the premarket. It appears that the market is hoping for a turnaround session on Thursday. It still appears likely that the TSLA stock may rotate toward support at $167.50 with the Moving Average Convergence Divergence (MACD) indicator in a bearish crossover. When its range bottom was reached on March 13, this is where TSLA opened. This price pattern will be viewed as a bullish double bottom if the stock stops here before rising further. In either case, Tesla stock must climb above $199 to leave its current neutral state.