(Reuters) – Tesla shares fell more than 3% on Monday, as the latest global price cuts raised concerns on Wall Street about the electric car maker's shrinking margins in the run-up to its earnings report later this week.
The company cut prices by up to $2,000 on its Model 3 and Model Y vehicles in several markets including the United States, China and Germany over the weekend, in its latest effort to boost demand that has slowed due to rising interest rates.
The cuts come ahead of its quarterly earnings on Tuesday, with the world's most valuable automaker expected to post its first revenue decline and lowest gross margin in nearly four years, according to LSEG data.
Investors are awaiting clarity from CEO Elon Musk on Tesla's strategy after he cut 10% of the company's staff last week and said focusing on autonomous driving was a “pretty obvious” move.
Musk had earlier this month announced an August event to unveil his “Robotaxi,” following a Reuters report on April 5 that said Tesla had scrapped its plan to develop a long-awaited, affordable EV in favor of robotaxis. “Reuters is lying,” Musk said after the report, without mentioning any inaccurate information.
Wedbush Securities analyst Dan Ives wrote in a preview note last week that the earnings would be a “moment of truth” and “one of the most important moments in the company's history.”
Tesla shares have lost more than 40% of their value so far this year, as polls and experts say Musk's leaning toward right-wing politics and polarizing public statements has alienated some potential buyers of its cars.
Monday's decline would have wiped about $20 billion off its market value of $468 billion, based on its total shares outstanding.
While Tesla remains the world's most valuable automaker, Toyota is slowly narrowing the gap on the back of a boom in demand for its hybrid cars.
The Japanese automaker has a market capitalization of $306 billion, as of its last close.
(Reporting by Aditya Soni in Bengaluru; Editing by Krishna Chandra Eluri)
