Tesla tumbled more than 7% on Thursday as Wall Street analysts questioned its ability to maintain the runaway growth that has for years set the electric-vehicle maker apart from other automakers.
CEO Elon Musk, who had called Tesla "recession-resilient" last year, said on Wednesday he was worried about the impact of high interest rates on demand after the company missed revenue estimates by the most in more than three years despite hefty price cuts.
The change of tone from one of the most prominent auto executives fanned fears about the outlook for the EV industry and was set to erase more than $50 billion from the market capitalization of Tesla, the most valuable automaker.
"It didn't have the same zip. We await Tesla's earnings calls with a sense of excitement and suspense — and they usually deliver. Not Wednesday night," Canaccord Genuity analysts said.
The company is expected to cut prices further in the current quarter to meet its annual deliveries goal of 1.8 million vehicles, even after its gross margin contracted to 17.9% between July and September from 25.1% a year earlier.
"Tesla's auto business is a legacy business now," Chaim Siegel of Elazar Advisors said.
The ramp up of "Blade Runner"-inspired Cybertruck will also pressure profitability in the coming months, likely offsetting the boost from easing commodity prices.
Overall, 10 analysts cut their price targets on the stock, pushing the median view to $260, according to LSEG data.
Tesla shares were at $224.89 in premarket trading. The stock has nearly doubled in 2023 on investor optimism that the company will fare better than rivals in an uncertain economy and see a long-term boost from its self-driving efforts.
Cash crunches at small EV startups and the ongoing strike at the Detroit Three automakers have also added to the optimism around Tesla.
Tesla trades at about 59 times its 12-month forward earnings estimates, compared with 6.3 times for Ford and General Motors' 4.2.
(Reporting by Aditya Soni and Akash Sriram in Bengaluru; Editing by Shounak Dasgupta)