(Bloomberg) — Tesla Inc.’s willingness to sacrifice profits in pursuit of buyers is threatening to weaken its claim to a higher stock-market valuation than rival auto companies.

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At least that’s the view of Tudor Pickering analyst Matt Portillo, who lowered his rating on the stock to sell from hold, the first such downgrade since mid-January.

Shares of the electric-vehicle maker nosedived on Thursday after first-quarter results showed the company’s aggressive price cuts on Tesla vehicles is hurting margins. What’s more, Chief Executive Officer Elon Musk signaled even lower prices could be on the way.

That strategy along with the “material delta in the valuation relative to other automaker peers,” drove the downgrade, Portillo wrote in a note. Tesla trades at about 44 times its forward 12-month earnings compared with mid-to-high single-digit multiples for General Motors Co. and Ford Motor Co.

Tesla’s results and management commentary on Wednesday did not provide much comfort on where margins might stabilize, according to the analyst. “This is likely to drive increased uncertainty for investors given a multi-year history of missing timing expectations,” he wrote.

Portillo was not the only analyst on Wall Street expressing caution about the EV-maker’s plan to continue lowering the prices of its cars. At least three analysts cut their targets for Tesla stock after the results, pointing to the risks to profit margins.

The automaker has 26 buy recommendations, 15 holds and seven sells, according to Bloomberg compiled data.

Tesla shares fell as much as 8.6% to $165.01 by 9:32 am in New York on Thursday. If the move holds through the rest of the session, the stock will erase more than $40 billion from its valuation. Despite the tumble, Tesla’s share price is up 36% this year.

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