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Data: Investing.com; Chart: Axios Visuals

Tesla’s third-quarter revenue fell by $2 billion, or almost 40%, in the U.S., a regulatory filing released Tuesday showed, the company's first drop in more than two years.

Worth noting: However, sales outside the U.S. jumped, with China sales growing 64% to $669 million.

The big picture: Tesla is sacrificing sales of its higher priced vehicles and in higher value markets like the U.S. to focus on growing its low-cost Model 3 and increasing market penetration in China.

  • Critics say this will destroy Tesla's thin profit margins, while Tesla bulls argue it will boost scale and make the company a household name worldwide.
  • The stock has risen more than 30% this month, but is less than 2% higher than its price at the start the year.

What they're saying: “Musk & Co. are laser-focused on Europe and China for growth, while domestically, core demand is fading relative to other regions,” Wedbush analyst Dan Ives told CNBC, adding that U.S. growth will remain more challenging going forward.

Yes, but: Analysts at Roth Capital on Tuesday downgraded Tesla shares to sell, calling the company's margins "unsustainable." They note that the Q3 filings shows warranty adjustments and other one-time items were "a large driver of perceived strength" in Tesla's Q3 earnings report that resulted in the stock's big gains.

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