Tesla (TSLA) stock is soaring Wednesday as investors cheer CEO Elon Musk's promises that he will step back from his responsibilities at the Department of Government Efficiency (DOGE).
Musk's pledge offset the company's dismal first-quarter earnings report, which came in much lower than analysts expected.
For the three months ending March 31, Tesla said earnings plunged 40% year over year to 27 cents per share while revenue slumped 9% to $19.3 billion.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Analysts expected the company to report earnings of 42 cents per share on revenue of $21.5 billion.
Sales and earnings results followed the release of the electric vehicle company's delivery numbers earlier this month. Tesla produced 345,454 vehicles and delivered 323,800 vehicles, representing year-over-year declines of 16% and 12%, respectively.
Tesla also said it is "difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand for durable goods and related services." Management will revisit its full-year guidance in Q2.
As for the positives in Tesla's earnings report, CFRA Research analyst Garrett Nelson points to the company's assurance that "it remains on track for the pilot launch of robotaxi in Austin by June."
Tesla also said "it plans to build the Optimus robot on the Fremont pilot production line in 2025," while Cybercap production is expected to begin next year, Nelson adds.
Musk talks DOGE in the Tesla earnings call
It's been a rough stretch for Tesla shareholders, with the stock down 41% for the year to date through the April 22 close.
"The company has become a political lightning rod," explains Steve Sosnick, chief strategist at Interactive Brokers, "thanks to Elon Musk's key role at the Department of Government Efficiency."
Sosnick goes on to say that a major element of Tesla is its futurism, with hopes for robotaxis, robotics and other inventions playing an integral role in its rich valuation.
And having "a visionary who is busy with the day-to-day mechanics of government bureaucracy is highly unlikely to be simultaneously making concrete progress toward those corporate goals," he adds.
But in Tesla's earnings call, CEO Elon Musk said that in the next month or so, his time at DOGE will "drop significantly" to one or two days each week.
As for the Trump administration's trade policies, Musk noted that Tesla is "the least affected car company with respect to tariffs, at least in most respects," though he admitted that "tariffs are still tough on a company when margins are still low."
For what it's worth, Tesla's operating margin came in at 2.1% for the first quarter, down from 5.5% the year prior, due to lower auto deliveries and higher costs related to its artificial intelligence (AI) initiatives.
Is Tesla stock a buy, hold or sell today?
Wall Street is currently on the sidelines when it comes to the consumer discretionary stock.
Of the 48 analysts covering TSLA who are tracked by S&P Global Market Intelligence, 16 say it's a Strong Buy, seven call it a Buy, 14 rate it a Hold and 11 have it at Sell or Strong Sell. This works out to a consensus Hold recommendation.
Oppenheimer analyst Colin Rusch is one of those with a Perform (Hold) rating on Tesla stock.
Rusch says that while he believes Tesla "has the potential to be a transformational technology company and deliver outsized returns," it's currently in "show-me territory with investors" given its long history of "promises and delays" on its various initiatives.
As such, he remains cautious on the shares.
Related content
-
Baby Boomers vs Gen X: Who Spends More?Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
Retire in Finland and Live the Nordic DreamHere's how to retire in Finland as a US retiree. It's ideal for those who value natural beauty, low crime and good healthcare.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
Stock Market Today: Good Feelings and Solid Data Lift StocksResilience and de-escalation defined another generally positive day for financial markets.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden RisksPotential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid OffLife insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.
-
Stock Market Today: Tesla Drags on Stocks Amid Musk-Trump FeudSentiment has soured between President Trump and his once-loyal ally, Tesla CEO Elon Musk.
