A man named Gary Black does not think Tesla's price cuts are a good idea. He believes that the company should not lower the prices of its cars because other car companies will copy them and Tesla won't sell more cars. He also thinks that Tesla's stock did not do well in 2022, even though it went up a lot in 2023. Gary Black is worried that Elon Musk, the boss of Tesla, might be making a mistake by cutting prices. Read from source...

1. Black implies that Tesla should not cut prices because competitors will match them and Tesla will get zero volume benefit. However, this argument ignores the possibility that cutting prices might increase market share, customer loyalty, or word-of-mouth referrals, which could ultimately lead to higher sales in the long run.
2. Black claims that he doesn't agree with the price cuts and that Tesla management is wrong to cut prices by more than the cost of goods reductions. However, this argument seems to overlook the potential benefits of price discrimination, where a firm charges different prices for the same product in different markets or time periods depending on factors such as demand elasticity, competition, and customer preferences. Price discrimination can help firms increase profitability by capturing more value from customers who are willing to pay more.
3. Black argues that the 102% stock price gain in 2023 is not evidence that Tesla's strategy of cutting prices last year worked, because the stock was down -65% in 2022 before the price cuts. However, this argument ignores the fact that the stock market is forward-looking and reflects investors' expectations about future performance, not past events. Therefore, the 102% gain in 2023 could be a sign that investors believe Tesla's strategy will pay off in the long run by attracting more customers and increasing market share, despite the short-term negative impact on earnings per share (EPS).
4. Black compares Tesla's stock performance to the Nasdaq 100 index over two years, implying that Tesla underperformed the market. However, this comparison is misleading because it does not account for the different risk profiles and growth potential of the companies in each index. For example, Tesla is a high-growth, innovative company with significant exposure to technology and environmental trends, while the Nasdaq 100 index consists of mostly mature, established companies that are less dependent on disruptive innovation. Therefore, it is not surprising that Tesla's stock performance would be more volatile and subject to market fluctuations than the average index member.
5. Black expresses doubt about Musk's ability to learn from his mistakes, implying that he has made repeated errors in judgment regarding price cuts. However, this argument ignores the possibility that Musk may have different goals or priorities than Black, such as increasing market share, promoting sustainable transportation, or fostering innovation. Therefore, what may appear as mistakes from a financial perspective could be strategic moves from a broader business or social perspective.

Negative

Key points:
- Gary Black is a Tesla bear who criticizes Elon Musk for cutting prices and lowering margins
- He argues that the price cuts are not rational or effective, as they do not increase volume or market share significantly
- He cites historical data to show that Tesla's stock performance has been poor compared to the Nasdaq 100 index despite the price cuts
- He questions the wisdom of relying on FSD subscriptions to make up for low margins on EV sales

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