There’s plenty of news to hit when it comes to Tesla (NASDAQ:TSLA). The largest electric vehicle (EV) maker in the U.S. has announced a new set of price cuts. It is working on renegotiating CEO Elon Musk’s pay package and is now planning on abruptly ending its referral program. These factors have sent TSLA stock down more than 3% today to a new 52-week low.
Tesla says it will end its referral program on April 30. This program, which was put in place to compensate Tesla owners who referred others to buy a Tesla, will no longer be active by the month’s end. Previously, Tesla owners who referred other car buyers would receive a $1,000 direct reward. This later turned into various tiered benefits.
This strategy allowed Tesla to save significantly on its marketing costs. However, with new advertising strategies in place, the company is clearly shifting gears dramatically. Let’s dive into what to make of this key announcement and why it’s a big deal for investors.
TSLA Stock Down on Latest Headwind
Tesla has clearly shifted its marketing and customer acquisition strategy from a grass-roots and word-of-mouth-oriented strategy to one focused more on a conventional advertising-based model. Many investors have questioned Tesla’s lack of advertising in the past; Musk has previously mentioned he “hates” ads. So, this move may not be surprising to those who have been calling for a more streamlined strategy. But it’s certainly a shift that’s worth paying attention to.
Demand for Teslas has been hit hard, which has resulted in the company announcing fresh price cuts. This round of cuts will reduce the price of its new vehicles by approximately $2,000 nearly across the board. This move coincides with some continuous and interesting commentary from the company’s CEO, who has slowly but methodically shifted toward taking more politicized stances on key issues.
The removal of this referral program is just the latest negative development for the once-thriving car brand, signaling we could be in for a dramatic shift in the EV landscape moving forward. Now, this is just one small announcement out of many, and there are other reasons why TSLA stock is being hit so hard right now. But putting all the pieces of the puzzle together, it’s certainly not looking good for Tesla.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
