To The Moon

Tesla (TSLA) is planning to lower prices of its Model 3 and Model Y cars in Hong Kong by up to nearly 15% on Saturday, according to the Hong Kong Economic Times.

The company is reducing the price of its Model 3 Performance car by 14.7%, and its Model 3 long battery life version by just over 11%. The price of the Model Y long battery life version and Performance version will be cut 8.7% and 9.03%, respectively.

TSLA shares are trading lower by 3.35% to $180. 54 upon market close, possibly following Automotive News data showing a decline in the company's market share.

The stock is also trading lower amid overall market weakness on recession worries. Major indices are lower following the released of the FOMC minutes, which showed that officials agreed to keep hiking rates in order to fight inflation. The Fed also said in the minutes it expects a mild recession this year.

A record 258,885 battery electric vehicles were sold in the U.S. in the first quarter of 2023, according to Cox Automotive. Tesla sold 161,630 of them. That gives Elon Musk's company a first-quarter market share of 62.4%, up from 59.3% in the fourth quarter. Battery-electric vehicles accounted for a record 7.2% of total U.S. sales.

That implies that Tesla's price cuts -- it slashed the costs of some models in the U.S. by roughly 20% in early January -- are working. A debate continues on whether the cuts are a sign of weakness or strength for the auto maker.

Price cuts can mean weaker demand, but that doesn't seem to be the case, given that Tesla was able to take a greater share of an expanding market.

10% profit under 10 mins after open

Tesla's market share is down from a year ago because the number of competitive EVs available has growth. Ten auto makers each sold more than 5,000 EVs in the first quarter of 2023, up from four in the first quarter of 2022.

The need to defend its market share might have been behind Tesla's price cuts. The company hasn't responded to multiple requests about its pricing strategy.

Bulls hope that part of the reason for the lower prices is that Tesla's costs have declined. Tesla has been ramping up production at two new assembly plants, and the more cars a factory makes, the lower the fixed costs are per vehicle.
Another positive factor is that prices for raw materials have declined from record levels.

As Tesla's costs fall, those who are upbeat on the stock say, it can offer lower prices for consumers. The hope is that leads to more demand while preserving profit margins.

Just trade the price action

Bulls and bears will get a look at Tesla's profit margins on April 19 when the company reports its first-quarter numbers. Wall Street expects automotive gross profit margins of about 21%, down from the 30% reported in the first
 quarter of 2022.

⚠️ Trading Tips: Looking at puts under 180 to 176 or calls above 182 to 184 on Thursday. Beware of Jobless claims and PPI data to move the market at pre-market.

$Tesla Motors(TSLA)$ Bearish

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