on April 3 after Tesla released the sales numbers, which showed it had produced around 17,000 more vehicles than it had delivered in the three months ended March 31. Data showing a slowdown in China's car market, the world's biggest, has also weighed on investor sentiment toward Musk's firm.last Thursday after the EV maker released a disappointing first-quarter earnings report, which showed profits plummeting 24% year-on-year.
Tesla has also raised its internal spending forecasts – which some investors took as confirmation that Musk's aggressive price cuts have and will continue to eat away at the company's margins.Falling margins are to be expected when a company cuts prices aggressively in a bid to boost its market share – but analysts weren't anticipating a 24% plunge in Tesla's profits.
"The extent of margin declines was below what I was expecting and what the market was expecting too," Morningstar equity analyst Seth Goldstein told Insider last week."That's why we saw the stock sell-off. It was a reaction to that." Some strategists slashed their Tesla price targets after its disappointing earnings – including New Constructs CEO David Trainer, who made theBut others believe it's too soon to know how Musk's price war will play out – with there still being a possibility that cheaper Teslas draw customers away from"Right now, it looks like the company's competitive position is being prioritized over protecting profitability," AJ Bell investment director Russ Mould said Thursday.
"We've taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and a higher margin," he said.