Tesla stock drops amid concerns over Model 3 demand, Musk's cost-cutting efforts
Stocks of Tesla were down Monday afternoon amid concerns over the demand for the Model 3 vehicle in the United States.
Tesla Inc.'s stock dropped 4.4 percent in midday trading to $201.83. The stock fell below $200 earlier in the session, its lowest point since late 2016.
Overall, shares of the auto and energy company have dropped 50 percent since September 2018.
Daniel Ives of WedBush, the financial services and Investment Company, said in a client note Monday that uneven signs on Model 3 demand could make it harder for Tesla to achieve a profit in its third and fourth quarters and the future.
"We continue to have major concerns around the trajectory of Tesla's growth prospects and underlying demand on Model 3 in the US over the coming quarters which is putting more heat in the kitchen on Musk & Tesla to reign in expenses at an accelerated rate with profitability targets in 2H19 a Kilimanjaro-like uphill climb," Ives warned.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 357.09 | +11.93 | +3.46% |
Tesla should also press pause on expanding into insurance, robotaxis and other projects, he suggested.
"The company instead should be laser-focused on shoring up core demand for Model 3 and simplifying its business model and expense structure," Ives added.
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The drop in shares follows Tesla CEO Elon Musk's announcement last week that he would personally review the company's expenses in an effort to trim costs.
In an email to employees, Musk said executives, including the CFO and Musk himself, would implement a "hardcore" cost-cutting program. Musk said the move was necessary because the company's first-quarter cash burn rate implies Tesla has just 10 months to break even.
The Associated Press contributed to this report.