Analysts were unimpressed after Tesla CEO Elon Musk announced a cheaper Model 3 on Thursday afternoon.
Shares of the company were down more than 3 percent in pre-market trading to $319.88. Investors also reacted to Musk's comments that it wouldn't be profitable in the first quarter.
Barclays analyst Brian Johnson probably had the coldest reaction, calling it the "un-iPhone moment."
Morgan Stanley analyst Adam Jonas also seemed skeptical, noting, "While this may stabilize the air-pocket in Q1 sales, we're concerned it's a sign of a brand that may be, at the margin, losing its halo of exclusivity."
"We think the bears have more material to work with than bulls here," Jonas added.
Here's what the analysts had to say:
" Another few 'blue pill' bull case points undermined... As we have long argued, the bull case for Tesla often revolves around it being the next Apple, with the Model 3 as the iPhone...But today's announcement of a lower priced $35k Model and closing all stores/galleries undercuts a few of those pillars..."
"Tesla significantly increased its efforts to promote the sale of cheaper cars... While this may stabilize the air-pocket in Q1 sales, we're concerned it's a sign of a brand that may be, at the margin, losing its halo of exclusivity. We think the bears have more material to work with than bulls here..."
"Ultimately, we think this announcement may have been anticlimactic for investors, with the timeline for the launch only accelerated a couple months and as we believe investors were looking for details on new products (Model Y or Pickup truck) and a potential update on Model 3 demand (remaining reservations, weekly order rates, initial international demand levels)... While we believe the introduction of the $35k Model 3 may be positive for overall program demand — which we and investors have been questioning given the phase out of the EV tax credit in the US and price elasticity of demand for the higher priced vehicle variants — we also think this will drive a downward mix impact for Model 3 margins..."
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