Tesla plummets amid profit warning, store closures, and Model 3 announcement
- Tesla shares plunged Friday after the company said it would likely wouldn't turn a profit in the first quarter of this year, and that it would shutter most of its retail locations.
- CEO Elon Musk disclosed the earnings update on a call with reporters Thursday.
- The stock's move caps off a hectic week for the company and its share price, which has seesawed between $320 and $289.
- Watch Tesla trade live.
Shares of the electric-car maker Tesla plunged nearly 8% Friday after it finally delivered on its promise to produce a Model 3 vehicle for $35,000, but in a reversal from the company's earlier forecast, said it expected to post a loss this quarter.
CEO Elon Musk disclosed the update on a call with reports Thursday. Tesla also plans to close most of its physical retail locations and move to an entirely online ordering model. Tesla said profitability would likely return in the second-quarter of this year.
Read more: Tesla's $35,000 Model 3 is coming - here's what Wall Street is saying
Garrett Nelson, an analyst at CFRA, on Friday lowered his rating on the stock to "sell," and slashed his price target from $315 to $265.
"The earnings warning confirms our belief that the drop in federal EV tax credit is having a material negative impact on TSLA's vehicle sales and earnings, a near-term headwind it will continue to face as the credit steps down and eventually goes away at year-end," Nelson wrote.
The decision to focus on a lower-priced Model 3 is likely to hurt margins and profitability, Nelson added. He also said it could "potentially erode brand value."
This development - along with legal uncertainty hanging over Musk as he faces a fresh inquiry from the Securities and Exchange Commission - led Nelson to lower his rating.
Tesla shares have fallen 3% so far this year.
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