To The Moon

Please find and follow my YT channel (nerdbull1669) for Daily SG and US Stock Watchlist. Do follow me as I share quality stock pick for Daily Watchlist. Looking at the recent price movement of $Tesla Motors(TSLA)$ , there are report that the 6% drop on Monday(06 April 2023) was due to their less than expectation delivery report. Benefit of Price Cuts Price cut was implemented in the U.S. to enable Tesla and its customers to take advantage of tax credits available under the Inflation Reduction Act. Some may argue that it is to attract buyers as more and more EVs continue to come into the market. But I think one have to understand the mentality of EV or luxury car buyer. This may pressure its rivals and hopefully it can capture the huge volume and dominate the EV market. Effectiveness of Price Cuts But this might not be so beneficial in the long term, as you will have to keep lowering the prices to keep up with increased competition. New players in the EV industry have a deep money chest and they will not be afraid of price cut to gain market advantage. Concern of Price Cuts After looking at Tesla (TSLA) quarterly deliveries report, some indication that in order to drive sales, more price cuts will be needed. This will definitely reduce the margins (hence, profitability will be an issue). This has led to some investors to start worrying about Telsa’s profitability. Looking at how Tesla stock have moved since Monday (03 Apr 23) till the time of writing. It has been falling since having close to $202 on Monday. There is an attempt to try to go above $200 on Tuesday but it failed. With this trend, are we seeing Tesla (TSLA) hitting below $175 this week? Price Cut Effect on Profit There has not been significant data showing that price cut increase the sales tremendously and hence boost the margins and profit. So what does price cut mean to the company and consumer? Like I have mentioned, consumers of EV vehicle or luxury vehicle are not so much concerned on the price itself. They would rather look for stability of the vehicle itself and branding, if both can worked well together, that would be a prefect scenario. More often not, it is either to choose the branding, I believe Tesla brand is pretty well established, they are the first few EV producer. I would think what consumer might look for next will be the stability or any enhancement on the vehicle or software. This can be seen by the many incumbent EV makers. For example, we know the the benefits of EVs include cuts in carbon emissions, oil-related economic and security gains. Moreover this is made more important with the possibility of higher gas price. But I think buyers would be more concerned on limited range and long charging hours. Here is how the range and charging hours stacked up between the 2 largest EV makers. Let’s say I am a potential EV buyer, what would I be concerned with? It is the time spend to charge but at what cost. Considering the time to charge and distance that one can travel, it seem like Tesla have an advantage, but why do they need to have price cut on their vehicle? Maybe it is time to consider other cost that are eating into their profit. Summary As an investor in Tesla share, I would not want to see the stock price tanking, I believe there are better way to profitability than using price cut. Appreciate if you could share your thoughts in the comment section on your view whether you think further price cut can help to improve profitability and increase the stock price for Tesla (TSLA)? Do like, share and comment on this article if you find this trading thought useful. @TigerStars appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts. Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.