Shares of Tesla (NASDAQ:TSLA) opened the week sharply higher, as investors reacted to a series of news items, including a report that Tesla might be preparing to launch a small, affordable electric vehicle for India.
Here are the stories that were moving the electric-vehicle giant's shares on Monday morning.
Tesla is already cutting the Model Y's price
Over the weekend, Electrek reported that Tesla has cut the U.S. price of its Model Y crossover SUV by $3,000, suggesting that demand for its latest model has been weaker than expected.
The starting price for the Model Y is now $49,990, down from the $52,990 that Tesla had been charging since deliveries of the electric crossover began in March.
The Model Y price cut follows the reductions that Tesla made to the U.S. starting prices of its three other models in May. At that time, roughly a month before the end of the second quarter, Tesla cut the prices of its flagship Model S and Model X by $5,000, and the price of its smaller Model 3 sedan by $2,000.
Some analysts saw those May price cuts as a sign of weaker demand. If so, they were the medicine that Tesla's sales needed: The company reported deliveries of 90,650 vehicles in the second quarter, a strong result.
Roth Capital thinks Tesla will soon launch a new small EV — in India
In a Monday-morning note, Roth Capital analyst Craig Irwin — a longtime Tesla skeptic — raised his rating on Tesla's shares to neutral, from sell, and boosted his price target to $750 from $350.
Irwin's note wasn't just a matter of an analyst throwing up his hands amid the stock's relentless rise. There's an intriguing case here: Irwin wrote that his checks show that Tesla's preparations to enter the Indian market are advancing and that India has similar upside potential to China for the EV maker.
While auto investors who know the Indian auto market might be skeptical — it's very price-sensitive, and at first glance Tesla doesn't have the right products to interest Indian buyers — Irwin wrote that his contacts have told him that Tesla plans to launch an electric mini-car in the relatively near future. Such a product, which Irwin thinks will be comparable in size to a Mini Cooper or Fiat 500, could open a new addressable market for Tesla in India that might be larger than the market for the Model 3 in Europe, he wrote.
Adam Jonas: Tesla's EV dominance may be near end
Another analyst who was once one of the loudest Tesla bulls on Wall Street is taking a more skeptical tone these days. In his note on Monday morning, Morgan Stanley analyst Adam Jonas continued his recent string of cautious comments on Tesla, writing that he thinks Tesla investors "underestimate the magnitude and momentum" of electric-vehicle competition that Tesla will soon face.
Tesla investors tend to discount (or completely ignore) the massively well-funded electric-vehicle efforts under way at companies like Volkswagen (OTC:VLKA.Y) and General Motors (NYSE:GM). But it's harder for them to discount electric-vehicle start-up Rivian, which completed a $2.5 billion equity raise last week.
As Jonas pointed out in Monday's note, Rivian, whose earlier investors include Amazon (NASDAQ:AMZN) and Ford Motor Company (NYSE:F), has now raised $6 billion, and Amazon, with Rivian, appears to be taking significant steps to push the adoption of zero-emission tech in its ecosystem. (Rivian has agreed to build a fleet of electric delivery vans for the online retail giant.)
Simply put, Jonas wrote, "the days of Tesla's virtually unchallenged dominance [in electric vehicles] may be numbered. He maintained his previous underweight rating and $740 price target for Tesla's shares.
Wedbush: Battery Day could push Tesla's stock higher
In another Monday note, Wedbush analyst Daniel Ives argued that Tesla's upcoming Battery Day, now set for September 22, could be a "major positive catalyst" for the stock, as the company is likely to showcase new technologies that investors will find compelling.
In the near term, Ives thinks that Tesla's second-quarter earnings report could also provide a boost. He wrote that Tesla's second-quarter deliveries total of xx may have been enough to drive a profitable result, which would be a "major feat" amid the strains of the COVID-19 pandemic.
Given that second-quarter result, Ives thinks Tesla could be in position to beat the consensus full-year forecast of roughly 400,000 deliveries by about 50,000 units.
Despite his optimism, Ives maintained his neutral rating on Tesla and his previous price target of $1,250.