Tesla shares down after surprise Model 3 price drop, store cuts

In this July 6, 2018, file photo, prospective customers confer with sales associates as a Model 3 sits on display in a Tesla showroom in the Cherry Creek Mall, in Denver.Wall Street reacted nervously on Friday to Tesla Inc’s move to shut its network of high-end showrooms and launch a long-awaited cheaper version of its Model 3 sedan, as shares fell 8 per cent and most analysts expressed concern over the company’s long-term margins.

In a note to investors titled “The $35k Model 3 – Genius or Desperation?,” Bernstein’s Toni Sacconaghi, Jr. noted that, “Given its seeming abruptness, it does not appear that yesterday’s announcement was made from a position of strength.” Investors have wondered whether Tesla, which has never posted an annual profit, will need to raise more capital to fund its expansion and pay off billions of dollars of maturing debts in coming years. The company is due to repay a $920 million convertible bond on Friday.Since unveiling the Model 3 in 2016, Musk has been promising a $35,000 version.

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