{"id":56510,"date":"2023-09-03T16:58:27","date_gmt":"2023-09-03T20:58:27","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/teslas-stock-drop-might-have-had-nothing-to-do-with-the-new-model-3\/"},"modified":"2023-09-03T16:58:30","modified_gmt":"2023-09-03T20:58:30","slug":"teslas-stock-drop-might-have-had-nothing-to-do-with-the-new-model-3","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=56510","title":{"rendered":"Tesla&#8217;s Stock Drop Might Have Had Nothing to Do With The New Model 3"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000735362\">\n<p>\n        Tesla<br \/>\n       stock took a tumble after launching some new hardware. Software, however, might have been the bigger reason for the drop.  <\/p>\n<p>Shares of the EV leader had a lousy Friday trading session, dropping 5.1%, while the<br \/>\n        S&amp;P 500<br \/>\n       rose 0.2%. The<br \/>\n        Nasdaq Composite<br \/>\n       was flat. <\/p>\n<div class=\"paywall\">\n<p>Most analyses, including <em>Barron\u2019s<\/em>, focused on the new version of the Model 3 launched in China and Europe. A refreshed version of the 3 should be a good thing, boosting sales of a model that\u2019s been on the road since 2017. But the news landed with a thud, possibly because<br \/>\n        Tesla<br \/>\n       stock had risen about 18% in the two-week period coming into Friday trading, or possibly because investors wanted more differences in the new Model 3, which comes with a new interior and longer per-charge driving range, among other enhancements. <\/p>\n<p>Something else might have sent shares lower. Along with a new 3, Tesla lowered the price of its Full Self Driving, or FSD, driver assistance software to $12,000 from $15,000. FSD is Tesla\u2019s highest-level driver assistance feature that CEO Elon Musk hopes will eventually turn Tesla vehicles into truly self-driving cars. All driver assistance features require drivers to pay attention essentially all of the time. <\/p>\n<p>A cut didn\u2019t seem to be imminent. \u201cThe price of FSD\u2026is actually very low, it\u2019s not high,\u201d said Musk on his company\u2019s second-quarter earnings conference call in July. \u201cThe value of the car [is] increased dramatically if it is actually autonomous\u2026if the car is worth several times its original price, $15,000 is actually a low price for FSD.\u201d <\/p>\n<p>He also suggested on the conference call that people could test FSD as a monthly subscription. Maybe lowering the price is designed to increase the number of people experiencing the system. Tesla didn\u2019t respond to a request for comment about the change. <\/p>\n<p>\u201cWe see the price cut as reflecting weak FSD penetration rates,\u201d wrote Canaccord analyst George Gianarikas in a Friday report, adding the cut is likely an \u201cattempt by the company to accelerate its razor-razorblade model.\u201d In this instance, the car is the razor and the FSD software is the razorblade. <\/p>\n<p>Gianarikas rates Tesla stock Buy and has a $293 price target for shares. <\/p>\n<p>Tesla is a little cagey about the number of customers who have purchased FSD, but 400,000 was a figure floated at the March investor day. At the time, Tesla had sold roughly four million cars globally, giving a take rate of about 10%. <\/p>\n<p>Tesla\u2019s take rate would have to improve to about 13% to break even on sales at a lower price point. It would have to do a little better than that to break even on gross profit generated from FSD sales, requiring the take rate to go to something closer to 14%, assuming average software profit margins. <\/p>\n<p>If the take rate doesn\u2019t change on the price drop, Tesla is probably putting at risk roughly $130,000 in gross profit in the final four months of the year. That\u2019s a little more than 1% of the gross profit Wall Street forecasts for the second half of 2023. <\/p>\n<p>It doesn\u2019t seem like a lot. Still, investors don\u2019t like surprises. <\/p>\n<p>Write to Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/tesla-stock-drop-new-model-3-ed1176d3?mod=investing\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tesla stock took a tumble after launching some new hardware. Software, however, might have been the bigger reason for the drop. Shares of the EV leader had a lousy Friday trading session, dropping 5.1%, while the S&amp;P 500 rose 0.2%. The Nasdaq Composite was flat. Most analyses, including Barron\u2019s, focused on the new version of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":56511,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-56510","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tesla&#039;s Stock Drop Might Have Had Nothing to Do With The New Model 3 | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Tesla stock took a tumble after launching some new hardware. Software, however, might have been the bigger reason for the drop. 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