Tesla Shares fell for a seventh straight day, hitting their lowest level since January 2023, as additional price cuts over the weekend heightened concerns ahead of the company's first-quarter earnings report on Tuesday.
The stock was down 3.5% as of Monday afternoon to $141.94, bringing its decline for the year to 43%, the second-worst decline among members of the S&P 500.
Tesla has cut prices in the US, China and across Europe, with discounts of up to $2,000 on the company's most popular electric vehicles, the Model Y SUV and entry-level Model 3 sedan. Tesla also reduced the price of its premium driver assistance system by a third. The system is marketed as a full self-driving, or FSD, option, though it requires a human driver at the wheel, ready to steer or brake at any time.
The FSD option, which previously cost $12,000 upfront or $199 per month on a subscription basis for most U.S. customers, is now listed on Tesla's website at $8,000 up front and $99 per month. The price cut comes after a month-long free trial that Tesla offered to customers across North America starting in late March.
The latest cuts add to growing investor concerns following weak first-quarter deliveries, layoffs and a Cybertruck recall.
Last week, Tesla issued a voluntary recall of 3,878 Cybertruck vehicles to fix a serious “trapped pedal” defect seen in a viral TikTok video from a Cybertruck owner.
According to a filing from the National Highway Traffic Safety Administration, the pad at the top of the Cybertruck's accelerator pedal could come loose and get stuck in the interior trim, causing “unintended acceleration.”
Ahead of the recall notice and price cuts, Tesla began a sharp and chaotic restructuring process, telling employees early last week that it would cut more than 10% of its global workforce. Layoffs are still ongoing, with some employees receiving notices that their jobs will be eliminated in the past two days, according to two current employees, who spoke with CNBC on the condition that their names be withheld from publication.
Tesla plans to discuss first-quarter earnings via a call Tuesday afternoon after the results are announced. Analysts expect a 5.1% decline in revenue, according to LSEG, which would be the first year-over-year decline since the second quarter of 2020, when the Covid pandemic disrupted operations.
“Since late 2023, sentiment toward Tesla (TSLA) has deteriorated,” John Murphy, an analyst at Bank of America, wrote in a note on Monday. Murphy said he expects investors to focus largely on feedback related to growth initiatives, specifically the Model 2's “next-generation platform” and robotaxis.
At Musk's direction, Tesla is “cancelling” its plans to launch a very affordable Model 2 electric car in the near term and will instead focus on developing a robotaxi, Reuters reported.
UBS analyst Joseph Spaak wrote in a report Monday that investors should “expect some fireworks” on the call, adding that Tesla's auto gross margins, not including environmental credits, and free cash flow will be key metrics.
“A quarter of negative free cash flow appears possible,” Sbaak wrote. This money becomes even more important to Tesla's story because “the current environment does not allow for financing of both” a robotaxi and a new affordable electric car.
Traders who bet against Tesla are reaping rewards from the stock's decline.
Short interest in the electric car maker was about 111 million shares, or 4% of the float, representing $16.3 billion in par value as of Monday's first half, according to S3 Partners. Tesla short sellers have made an estimated $9.4 billion this year, making it the most profitable short seller in the US market, far ahead of apple In the amount of 3 billion dollars.
— CNBC's Michael Bloom contributed to this report.
Watch: Tesla stock hits 52-week low ahead of earnings
