Tesla Inc’s shares sank nearly 10 percent on Thursday after Elon Musk, the company chief executive, signalled the electric vehicle maker will keep cutting prices to drive up demand even after taking a big hit to margins.
The stock was trading at $163, dragging down other automakers.
At least 15 analysts lowered their price targets on Tesla, whose market value was on track to drop by $50 billion to about $517 billion, if losses hold, Reuters reported.
That would put Tesla’s value below that of Meta Platforms Inc for the first time since 2021.
“Facing a volatile macroeconomic backdrop and weakening demand, Tesla continues to prioritize units over near-term profits,” said analysts at Canaccord Genuity.
Tesla gross margins falls in Q1 2023
Tesla’s gross margins fell in the first quarter to the lowest in more than two years, missing market estimates, after the company kicked off a global price war in January to defend its dominance in the US and make inroads in China, its second-largest market.
Tesla has already slashed prices six times this year and Musk suggested more such moves ahead, saying the company will put sales growth ahead of profit in a weak economy.
“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.
Investors dumped automakers from Europe to the United States on fears that margins will be sacrificed for maintaining share in a market that is slowing.
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