Tesla's stock price plunged by more than 17% for three consecutive days after the company released its third-quarter earnings report on Thursday. The report showed that Tesla's net profit fell by 44% year-over-year to $1.85 billion, the lowest in four years.

The recent price cuts suggest that consumers are no longer willing to pay a premium for Tesla's electric vehicles. This raises questions about whether the company's high valuation is justified.

Tesla's stock price fell 9.3% on Thursday after the company reported disappointing earnings and Elon Musk's cautious tone during the earnings call. As of Friday, Tesla's stock price has fallen 17.77% over the past three trading days, and its market capitalization has fallen by $136 billion.

Even after the recent decline, Tesla's market capitalization is still close to $700 billion, which is significantly higher than its competitors. However, the company's core automotive business's profitability has fallen to its lowest level in over four years. The business's gross margin (16.3%, excluding revenue from carbon credits) has been compressed to a level that is close to General Motors and Ford.

After the earnings report was released, several Wall Street banks downgraded Tesla's valuation. However, Daniel Ives, managing director and senior equity research analyst at Wedbush Securities, said he still has a bullish view on Tesla. He cited the longer-term demand for electric vehicles, the efficiency gains from the 4680 battery, the success of full self-driving (FSD), and Tesla's global expansion as reasons for his optimism.

Ives also noted that market patience is wearing thin due to concerns about gross margin and delivery volumes. However, he said he still sees Tesla as a good investment over the next 12 to 18 months. "We maintain our 'outperform' rating on Tesla, while reducing our price target from $350 to $310," Ives added.

Editor: Alexander