Tesla’s stock plummeted by 12% on Thursday following warnings from CEO Elon Musk that sales are expected to slow down this year despite recent price cuts that have already impacted profit margins.

Musk stated that growth would be "significantly lower," as Tesla focuses on a cheaper next-generation electric vehicle to be manufactured at its Texas factory in the second half of 2025, which is anticipated to trigger the next surge in deliveries.

However, Musk's remarks significantly weighed on investor sentiment, with Tesla losing nearly $70 billion in market value. This loss could bring the total for the month to about $200 billion. It should be noted that the company's revenue and earnings for the fourth quarter of 2023 were also below expectations.

The electric vehicle sector has been grappling with a demand slowdown for over a year, and Tesla's price cuts are likely to exacerbate pressure on new businesses and automakers like Ford.

"Tesla’s challenge is that any significant effort to boost sales going forward is likely to come at the cost of further operational margin erosion, due to competition with BYD in China and increased competition elsewhere," said Michael Hewson, Chief Market Analyst at CMC Markets.

At least nine brokerage firms have downgraded Tesla's stock, while seven have raised their ratings. On average, the company holds a "hold" rating with a target price of $225, nearly 9% higher than its last closing stock price.

Tesla's short sellers have gained $3.45 billion so far this year, making it the most profitable short trade in the US, according to data and analysis firm Ortex.