Tesla (TSLA) has slashed the price for its Model Y crossover by $3,000 to $49,990 from $52,990 previously. The move comes less than four months after Tesla started delivering the vehicle in mid-March.
It is also not the first price cut of late. Tesla reduced the price for the Model S and the Model X by $5,000 and $2,000 respectively in May.
The price cuts were viewed as an “acknowledgment that Tesla isn’t immune to material North American demand weakness,” commented Roth Capital analyst Craig Irwin at the time.
However TSLA subsequently announced total 2Q deliveries of 90,650, well ahead of FactSet consensus of 68,380. Model S/X deliveries were 10,600, ahead of consensus’ 8,660 estimate, while Model 3/Y deliveries were 80,050 vs. consensus of 59,250 Model 3/Y.
Not that RBC Capital’s Joseph Spak was too impressed. “A good overall performance in light of the pandemic, but signs of trouble for more mature markets/products” the analyst wrote.
“Yes, TSLA able to show good headline numbers relative to an auto industry that really felt impact of COVID-19. But we must also remember, that TSLA benefits from entering a new market this year (yes they sold in China prior, but only started making in China in earnest this year). This of course, counts as growth, and new markets/products is part of the TSLA story” he explained.
But what really stopped the analyst from taking a more positive view on Tesla stock was the price. Shares are currently trading up a whopping 270% year-to-date.
“Bullishness is very high; we can’t recommend adding believing that current price more than discounts positive arguments” Spak concluded. He has a sell rating on the stock and $615 price target.
Overall Wall Street analysts are sidelined on the stock’s outlook. The Hold analyst consensus breaks down into 9 Sell ratings and 10 Hold ratings versus 7 Buy ratings. In light of the recent rally, the $816 average price target now implies 47% downside potential. (See Tesla’s stock analysis on TipRanks).
Amazon Delays Prime Day- This Time Until October
Has Apple Surged Too Far, Too Fast? Analyst Weighs In
Alibaba’s CEO Sets Out Ambitious Goals; Sees 2B Customers By 2036