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.
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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.
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