After reporting a miss in its third-quarter earnings, shares of Tesla (TSLA) -) dropped sharply, closing the session down 4.7% and dropping another 6% in after-hours trading. The electric vehicle leader reported adjusted earnings per share of 66 cents, down 37% from the year-ago period and well-off Street estimates of 73 cents.
This comes on the heels of Tesla reporting a miss in deliveries for the quarter, delivering 435,000 vehicles compared to the Street's expectations of 455,000. Tesla did, however, reaffirm its intentions to deliver 1.8 million vehicles for the year.
Investors who were looking to Tesla Chief Elon Musk to provide some good news in the conference call were additionally disappointed. Musk, displaying a level of caution and self-prescribed paranoia around the current macroeconomic environment, said that the company's main goal at the moment is to make its cars affordable in an environment where affordability is a challenge.
Wedbush's Dan Ives brought his Tesla price target down from $350 to $310 as a result.
The analyst noted that he would characterize the conference call as a "mini disaster," saying that where the Street wanted to "get their arms around the falling margins/constant price cuts," they instead "heard a much more cautious Musk."
Ives noted that his thesis for Tesla as a Big Tech company is unchanged, but is now facing challenges.
Deepwater's Gene Munster likewise found the company's third-quarter results to be a "disappointment."
There were "more misses than hits in this," he told CNBC, noting that the downward trend of Tesla's gross margins is not the kind of trend Tesla needs right now. These margins, Munster said, will mark Tesla as a car company or as a tech company. The lower they fall, the more in line with traditional auto Tesla becomes.
Tesla's gross margins fell to 17.9% from the quarter, down from the 25.1% the company reported in the year-ago period.
Related: Key Tesla investors at odds with Elon Musk on one important point
"I'm surprised that the stock is not down more," Munster said.
He did take note of a few positives, one of which involves the long-awaited Cybertruck, which will begin making deliveries in November.
"This is going to be positive for Tesla shares," he said. "I think investors are going to start to see that having a measurable impact on delivery growth."
Despite the fact that it was a "directionally negative quarter," Munster said Tesla still managed to grow deliveries by 28%, more than double the rate of big auto in the U.S.
"Long term, I think traditional auto is in a tough spot," Munster said.
Shares of Tesla dipped to $226.81 in pre-market trading.
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