Tesla Inc. TSLA shares fell about 5% in premarket trading on Friday.
What happened: The move lower comes as the company slashed the price of its electric vehicles in the U.S. by about 6.4% to 19.7%.
While Tesla supporters hailed the move as a step in the right direction that would help boost volumes and thereby increase market share, investors are apparently concerned about the impact the move may have on margins.
See also: The best stocks for electric vehicles
The negative sentiment could stifle the recovery the stock has been making since its bottom in the first trading session of the year.
A similar announcement by Tesla last Friday regarding price cuts in China initially drew a negative reaction, but the stock rallied to close about 2.5%.
It could be a different story this time, as investors worry about a further decline in margins ahead of the company’s earnings announcement on Jan. 25. Tesla has adjusted prices downwards in all regions since the end of October.
A drop below $108 could result in technical weakness for the stock.
Price promotion: In Friday’s premarket trading session, Tesla fell 4.88% to $117.54, according to Benzinga Pro data.