Tesla Stock Set To Open At Fresh 15-Month Lows: What's Draining EV Maker's Charge?

The Tesla, Inc. TSLA sell-off could continue unabated as the stock traded sharply lower in premarket trading on Monday.

The negativity is attributable to the company’s resumption of price cuts – a strategy shunned by analysts as margin-eroding. Late Friday after the market closed for the week, Tesla sprang in a surprise by announcing a $2,000 price cut for its U.S. electric-vehicle lineups, excluding the refreshed Model 3 and Cybertruck.

The company replicated the move elsewhere as it took down EV prices in China, one of its key markets, Germany, and several other overseas markets.

Also, Tesla reduced the price of its full self-driving software from $12,000 to $8,000.

The aggressive move came just ahead of the EV maker’s first-quarter earnings report, due Tuesday, after the close. Analysts and investors are mindful of a potentially disappointing quarter after the company reported earlier this month a year-over-year decline in quarterly deliveries.

Following the price cuts, Future Fund’s Gary Black said he expects competitors to match the move and therefore Tesla will unlikely see any volume benefit. He quantified the impact of the global price cuts as $2.7 billion per year in revenue or 60 cents per share of earnings per year.

Black also reduced his price target and estimates for Tesla following the weekend move and said he expects Wall Street analysts to drop theirs as well.

In premarket, Tesla fell 2.96% to $142.70, according to Benzinga Pro data. If the negativity persists, the next stop could be around the $129 level. Further supports are found around the $110 and $96 levels.

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See Also: Everything You Need To Know About Tesla Stock