Shares of electric vehicle manufacturer Tesla fell around 7% on Thursday, a day after the company reported a more than 20% drop in both net income and GAAP earnings compared to the year-ago quarter.

Tesla reported net income of $2.51 billion in the first quarter of 2023, down 24% from the prior year, and GAAP earnings of 73 cents, down 23% from the year before. Tesla CEO Elon Musk also suggested that the company would prefer higher volumes to higher margins, a comment that prompted some concern from analysts.

“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here, versus a lower volume and higher margin,” Musk said on an earnings call. Tesla has cut U.S. prices six times since January, with the most recent reduction this Tuesday. Tesla has cut the price of its Model 3 by 11% this year. Prices of its Model Y have been cut by 20%.

“We are cautious of the discounting given LT brand risk,” a note from Wells Fargo read, referring to longer-term damage to Tesla’s brand. Wells Fargo cut its price target for Tesla from $190 to $170.

Analysts from Oppenheimer wrote that while Tesla would benefit over time from the potential market-share gains that price cuts could bring, “near-term margin pressure” would continue “to be a concern for investors.” Oppenheimer has a “perform” rating on Tesla stock.

Tesla shares remain elevated from a dismal 2022 performance which mirrored the broader downturn in tech companies. Shares of the electric vehicle manufacturer are up nearly 47% year-to-date.

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