Tesla knocks down price on Model S

Tesla Model S

Want a price break on that Tesla?

According to brand new reports, U.S. buyers will soon be able to get a slight reduction in price on a Tesla Model S.

Breaking news from the automotive industry shows that Tesla has brought the top sticker price from $74,990 to $71,990 in the U.S. while also decreasing the corresponding Model S price by 3% in China.

Notwithstanding this new price cut, the Tesla is still massively expensive by the standards of most American and Chinese families.

Still, Elon Musk remains sanguine about Tesla’s ability to ship cars, setting a goal of 500,000 sales for the year. The third quarter saw Tesla shipping just over 139,000 cars, and to meet that half-million mark, the company would have to ship 182,000 cars in the last quarter.

As for Tesla’s stock, the equity ballooned to over triple its previous value throughout the year, before Tesla enacted a 5 to 1 split that seems to delimit its growth. Since the stock split, the price has deflated a little bit, in the neighborhood of 10% to 15%.

During the TSLA boom, analysts saw short activity fade away.

Ihor Dusaniwsky tweeted this, suggesting that the shorts were being shaken out of the sheets:

“$TSLA short int is $19.87BN; 10.53MM shs shorted;7.10% of float;0.30% fee.Shs shorted down -2.15MM shs,-17%, over last 30 days as price rose +26% & down -637K shs,-6.%, last week. Shorts down -$23.67BN in 2020 mark-to-market losses; down -$83MM on today’s +0.42% move.”

More recently, analysis by Doug Kass at Seabreeze Partners Management provides “three reasons to be short” on Tesla, presenting a more nuanced picture of the company’s growth, and the volatility around it.

“Tesla rallied about 500% in the first eight months of 2020 but crashed about 30% in the first nine days of September,” Kass reports. “Tesla stock bulls typically argue that the company is dominating the nascent global electric vehicle market, and comparing the stock and its valuation to legacy auto stocks is irrelevant. At the same time, Tesla bears often point out that the stock’s valuation is extremely high even compared with high-growth tech stocks, and Tesla will face an unprecedented wave of new competition in the next couple of years.”

Some analysts might say that Tesla has achieved enormous growth in 2020 by continuing to set ambitious goals.

The new price cut, however, suggests that there may be challenges ahead for the electric car maker.