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Pro Analysis

Avoid Tesla due to aggressive discounting: Analyst

A Tesla Motors Model S electric vehicle on display at the company's showroom in San Francisco.
David Paul Morris | Bloomberg | Getty Images
A Tesla Motors Model S electric vehicle on display at the company's showroom in San Francisco.

Pacific Crest told investors to be wary of Tesla shares, citing the profit margin risk from increased price discounting.

"Checks indicate Model X orders have improved, but we detected aggressive Model S discounting at U.S. sales centers intended to maximize Q3 deliveries," analyst Brad Erickson wrote in a note to clients Tuesday.

"So while a strong Q3 delivery number could provide some reprieve for the bulls, our view of declining quality for incremental Model S demand poses ASP and margin risk while calling longer-term demand into question."