TSLA Drops as Cybertruck Price Hike Sparks Volatility

Tesla Adjusts Cybertruck Pricing Strategy

Tesla Inc. (NASDAQ: TSLA) has made significant changes to its Cybertruck lineup, discontinuing orders for the most affordable model and increasing prices for the remaining variants. This shift comes as Tesla adapts its strategy in the competitive electric pickup truck market. Despite its long-term success, Tesla’s stock continues to experience challenges in 2024.

Tesla Increases Base Price for the Cybertruck

Tesla has stopped accepting orders for the $61,000 base model Cybertruck, focusing instead on the $100,000 version for immediate delivery. The company has removed the least expensive option from its website and significantly raised prices on the remaining models:

• The dual-motor all-wheel drive variant now starts at $99,990, up from $79,990.
• The tri-motor “Cyberbeast” variant has increased to $119,990, from $99,990.

These price increases represent a substantial jump from the originally projected 2019 starting price of $39,990, with current pricing now $39,000 to $60,000 higher than initial estimates.

This pricing strategy indicates that Tesla may be facing lower demand than the initially projected 1 million reservations. By focusing on higher-margin models, the company appears to be prioritizing profitability over mass-market accessibility. However, this approach could impact Tesla’s ability to reach a broader customer base with the Cybertruck, a critical product for its expansion into the pickup truck market. Despite these changes, Tesla still plans to produce 200,000 Cybertrucks annually, underscoring the vehicle’s importance in the company’s product lineup.

Tesla Stock Faces Significant Volatility

As of 10:11 AM EDT on the day of reporting, Tesla’s stock was trading at $196.51, down $3.49 or 1.75% from the previous close. The company’s market capitalization stood at $627.72 billion, with a price-to-earnings ratio of 56.18 and earnings per share of $3.56. Tesla’s stock has shown significant volatility, with a beta of 2.01 and an average daily trading volume of 119,771,466 shares.

While Tesla’s stock has delivered an impressive five-year return of 1,154.15%, far outpacing the S&P 500’s 83.18% gain over the same period, its recent performance has been less stellar. The stock’s year-to-date return of -20.92% and one-year return of -19.02% both trail the S&P 500’s performance.

Despite these challenges, Tesla maintains a strong financial position with $30.72 billion in cash and a profit margin of 13.00%. Investors are closely watching Tesla’s upcoming earnings report, expected between October 17 and October 21, 2024, for insights into the company’s future prospects and the impact of its Cybertruck strategy.