Do You Want $1000 From Tesla?
Tesla Motors Inc. (TSLA, -0.38%) is giving away money. On Wednesday, the electric car company announced that they will be introducing a referral program. That is, all new car buyers will receive $1,000 if they have used a referral link from a previous buyer. The new buyer of the Model S electric sedan, with a starting price of $70,000, will receive a reduction of $1,000 off the new car, accessories or services. This new referral program was unveiled by the Chief Executive of Tesla, Elon Musk, during a conference call. Let’s put it into perspective. Tesla spends approximately $2,000 in order to sell a car through its stores. The aim now is to boost ‘word of mouth’ and in this way, Musk is hoping that this will reduce the need to open new stores in the future. Musk stated during the call that while Tesla is planning on opening new stores, they are hoping that their latest referral program will assist them in reducing the number of these stores. In addition, Elon Musk stated that the referral program can be viewed as part of Tesla’s “guerrilla battle" with other car dealers. Today, Tesla does not use car dealerships in order to sell their cars and this is done instead by the company directly to customers. The problem however is that in some states, such as West Virginia and Texas, Tesla is not able to do this. The new referral program will provide existing Tesla car owners the ability to give their friends a $1,000 discount and in addition, if someone provides 5 referrals, the original car owner will be invited to visit and tour the "gigafactory" of Tesla which is located outside Reno, Nevada and will also be invited to attend the grand opening party. Should a customer refer 10 new buyers, they will be entitled to purchase the Founder Series Model X, which is currently not available to the public. All options will be provided free of charge in the new car. In addition, the customer who reaches 10 referrals first, will receive the Founder Series Model X free of charge. Interestingly, the shares of Tesla declined after the unveiling of the referral program and they are currently trading at $263.82 a share.
On Wednesday, U.S. stocks closed higher. This came after Chairwoman, Janet Yellen, of the Federal Reserve provided no clear indication regarding the timing of an interest rate hike by the central bank. Yellen did however leave room to act as early as September this year. According to Yellen, this increase would be dependent on ‘solid’ gains in the jobs market. There was a unanimous vote among policy makers to maintain the current interest rate and it was made clear that the timing would be dependent on economic data out of the country. At the close of trading, the S&P 500 index (SPX) rose 0.7%, or 15.32 points, to 2,108.57. All 10 of the index’s sectors finished higher. This came in response to an increase in oil prices which boosted energy stocks while consumer discretionary and industrials stocks also advanced. Also on the upside was the tech heavy Nasdaq Composite index (COMP) which rose 0.4%, or 22.53 points, to 5,111.73 while the Dow Jones Industrial Average (DJIA) advanced 0.7%, or 121.12 points, to 17,751.39. This marked the 5th consecutive triple-digit move for the blue-chip index.
On Wednesday, the U.S. dollar (USD) traded higher. This came despite poor data on pending home sales in the U.S. in June after 5 months of increases. According to the National Association of Realtors, their index of pending home sales declined to 110.3, down 1.8% in June. This missed expectations for a gain of 1.0%. Despite the decline, it was still the 3rd highest reading this year. The EUR/USD traded at 1.1034, down 0.22% while the USD/JPY traded at 123.74, up 0.14%. Against the Canadian dollar, the Swiss franc and the British pound, the U.S. dollar traded mixed with the USD/CAD steady at 1.2926, the USD/CHF steady at 0.9625 while the GBP/USD was up 0.41% and trading at 1.5677. The U.S. dollar index was at 96.88, up 0.12 percent.
In Asian trading on Thursday, crude oil prices gained. This came in response to the positive assessment of economic growth prospects in the U.S. while investors digested the comments by the Federal Reserve with the expectation that an interest rate hike could take place this year. WTI crude for September delivery traded at $48.90 a barrel, up 0.23%, on the NYMEX. In addition, on Wednesday, Brent crude oil for delivery in September traded at $53.36 a barrel, up 0.11%, or $0.06, on the Intercontinental Exchange (ICE) in London. The spread between the international benchmark of crude stood at $4.61.