Tesla (TSLA) Stock: Investors Cheer as Musk Pledges to Come Home to Tesla
TLDR
Tesla’s Q1 earnings missed expectations with $19.34B revenue vs $21.43B estimate
Musk announced he will “significantly” reduce his time at DOGE starting in May
Tesla stock jumped 7.43% in pre-market trading following the announcement
Company confirmed new affordable vehicles are on track for production in H1 2025
Tesla removed long-term growth forecast due to trade policy uncertainty
Tesla shares climbed sharply in pre-market trading following CEO Elon Musk’s announcement that he would scale back his government role. This news overshadowed the company’s disappointing first-quarter results.
Tesla reported first-quarter revenue of $19.34 billion, falling well below the Bloomberg estimate of $21.43 billion. The figure also represented a decline from the $21.3 billion reported in the same period last year.
Earnings per share came in at $0.27, missing the expected $0.44 mark. Despite these misses, investors appeared to focus on Musk’s commitment to spend more time at the EV maker.
“Starting early next month, in May, my time allocation to DOGE will drop significantly,” Musk stated during the earnings call. He indicated he would continue to spend one or two days per week at the Department of Government Efficiency but would be “allocating far more of my time” to Tesla.
This announcement triggered an immediate 5% jump in after-hours trading on Tuesday. The momentum continued into Wednesday with shares rising 7.43% in pre-market trading to $255.65.
Source: Yahoo Finance
Production Timeline Maintained
Tesla maintained its timeline for new vehicle launches despite recent media reports suggesting delays. The company confirmed plans to begin production of its more affordable vehicles in the first half of 2025.
The automaker also reaffirmed that Robotaxi volume production remains on schedule for 2026. Musk added that the company would deploy Robotaxi testing in Austin this June.
These production timelines had been key investor concerns heading into the earnings report. The confirmation helped offset worries stemming from a Reuters report that suggested Tesla’s plans for an affordable EV had been pushed back.
Tesla executives did not directly deny the Reuters report but emphasized the company was focusing on affordability with models that would resemble existing Tesla vehicles.
Trade Uncertainties Cloud Outlook
Tesla pointed to trade policy challenges as a major factor in its recent performance slump. The company cited “rapidly evolving trade policy” that “adversely impacts the global supply chain and cost structure.”
“This dynamic, along with changing political sentiment, could have a meaningful impact on demand for our products in the near-term,” the company stated.
Musk revealed he had advised President Trump that “lower tariffs” would benefit the country. However, he acknowledged that tariff decisions ultimately rest with the president.
Due to these uncertainties, Tesla announced it would revisit its 2025 guidance in its second-quarter update. More concerning for long-term investors, the company removed its long-term growth forecast altogether.
Gross margin for the first quarter reached 16.3%, slightly better than the 16.1% analysts expected. Automotive gross margin excluding regulatory credits came in at 12.5%.
In previous guidance, Tesla had promised to launch lower-priced EVs in early 2025. The company had suggested these new vehicles would help return Tesla to a 50% growth rate compared to 2023.
Demand has emerged as the central concern for Tesla’s automotive business. The company reported first-quarter deliveries of 336,681 units, well below the Bloomberg consensus estimate of 390,342. This marked Tesla’s worst delivery quarter since Q2 2022.
Meanwhile, rival manufacturers have seen substantial sales increases as consumers accelerated purchases to avoid new tariffs that took effect on April 2. Chinese automaker BYD has been steadily capturing Tesla’s market share overseas.
President Trump’s 25% tariffs on foreign auto imports have created challenges for Tesla and other manufacturers with global supply chains.
Tesla’s sales challenges extend beyond the United States. Registration data from key European markets showed declines in March, indicating continued sales pressure in important international regions.
Some analysts have connected Tesla’s brand challenges to Musk’s political activities. His alignment with President Trump and right-wing politicians in Europe has sparked protests at Tesla showrooms and even reports of vandalism targeting Tesla vehicles.
Despite these challenges, investors appeared heartened by Musk’s commitment to refocus on Tesla operations, sending the stock higher following the earnings report.
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Filed under: News - @ April 23, 2025 11:25 am