Tesla stock falls after Elon Musk says the company likely won’t turn a profit this quarter.
Tesla Inc. may have made good on its long-standing promise to offer a Model 3 for $35,000, but its stock fell late Thursday as Chief Executive Officer Elon Musk said the Silicon Valley car maker is likely to report a loss in the first quarter.
“Tesla’s biggest challenge going forward will be meeting production volumes and demand while maintaining timely service for a rapidly-expanding customer fleet,” he said. “If Tesla can do this, it will have successfully transitioned from a boutique auto maker with a niche audience to a mainstream brand serving mainstream consumers.”
“While there are still questions that need to be answered around logistics and delivery, combined with the margin profile on this model, we believe this strategic shift was the right move at the right time for Tesla, although the stock will be a ‘prove me’ name for the next 6-9 months,” they said. The switch to online-only gives Tesla a chance to sell its vehicles in all U.S. states, regardless of franchise laws, he said. The company has waged long wars in certain U.S. states due to franchise laws limiting car sales to dealerships.The decision to switch to online sales was “hard,” Musk said, but one that ultimately was right for Tesla and for the company’s future.Earlier this week, Musk changed his Twitter name to “Elon Tusk” and teased the Thursday news, without elaborating further.
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