Tesla Shares Drop on Price Cut, Disappointing Model 3 Deliveries
Shares in Tesla dropped as much as 9 percent on Wednesday on worries of future profitability, after the electric car maker cut U.S. prices for all its vehicles to offset lower green tax credits, while falling short on quarterly deliveries of its mass-market Model 3 sedan. Analysts questioned whether the $2,000 price cut on all models signaled lowered demand in the United States, and ultimately whether the move would undermine nascent profitability at the Silicon Valley automaker, which has never posted an annual profit. “In our view, this move could suggest that what many bulls assume to be a substantial backlog … for Tesla may be less robust,” wrote Bank of America analyst John Murphy in a client note. Chief Executive Elon Musk, who has often set goals and deadlines that Tesla has failed to meet, surprised investors by delivering on his pledge to make Tesla profitable in the third quarter, for only the third time in its 15-year existence. But the company is unprofitable for the first nine months of 2018, and cash flow remains a concern for investors. Pressure to deliver on promise Musk has been under intense pressure to deliver on his promise of stabilizing production for …