Tesla’s (TSLA) revenue within the first quarter of 2025 plunged a shocking 71 p.c, as gross sales dropped 9 p.c from the year-ago interval. Regardless of the gross sales decline — and the opportunity of extra to return — the electrical automobile maker’s inventory truly rose after the report, as Tesla CEO Elon Musk introduced that he was paring again his function on the Division of Authorities Effectivity (DOGE).
Tesla inventory was just lately down greater than 50 p.c from its all-time excessive, which was reached in December 2024, a startling plunge for one of many Magnificent 7 shares. So the shares’ latest bounce on “much less dangerous” information will not be so surprising, however with Musk saying that he expects to proceed his function at DOGE with fewer hours, the carnage could also be removed from over at Tesla.
Tesla’s first-quarter gross sales and Musk’s key-man threat to Tesla
For the primary quarter, Tesla reported gross sales of $19.34 billion, in comparison with $21.3 billion within the first quarter of 2024. However the extra attention-grabbing determine is gross sales from vehicles, which plunged 20 p.c within the interval. Tesla reported first-quarter deliveries that missed analysts’ estimates by 14 p.c, making it the bottom quarter for deliveries for the reason that second quarter of 2022.
The dangerous information may be getting began, as shoppers throughout the globe react to Musk’s political actions as a part of DOGE and his ties to U.S. President Donald Trump. In March, automotive registrations plunged by high-double-digit percentages in key European markets resembling France, Norway and Denmark. And it wasn’t solely Europe. In China, Tesla’s second-most-important market, shipments fell 49 p.c in February. Within the U.S., Tesla can also be dealing with shopper backlash, together with boycotts, vandalism of Tesla autos and outright destruction of vehicles, in line with varied media experiences.
However whereas Tesla stumbles, electrical automobile gross sales proceed to rise in Europe. The European Car Producers’ Affiliation stated that EV registrations in its markets truly elevated by 31.4 p.c in January and February versus a 12 months in the past. So it’s not shoppers turning away from electrical autos; they’re turning away particularly from Tesla.
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Musk’s lowered give attention to Tesla has led to slumping gross sales, say some traders, and even famous Tesla bull and Wedbush analyst Dan Ives known as on Musk to “change course.” Musk appears to have heeded the calls, saying that possible beginning in Could he would reduce his time at DOGE to only one or two days per week for the remainder of Trump’s time period in workplace.
Whereas Musk says that he’ll spend extra time at Tesla, the injury to Tesla’s model might already be finished. And importantly, Musk’s announcement nonetheless doesn’t get rid of the important thing reason behind the Tesla backlash — Musk’s ongoing affiliation with DOGE (and extra usually, Trump). So Tesla is more likely to proceed to undergo reputational hurt as a result of key-man dangers introduced by Musk.
Tesla traders ought to stay cautious
Whereas the huge decline in Tesla inventory helps scale back the chance of consumers immediately, traders ought to contemplate the truth that Tesla nonetheless appears to be like massively overpriced by typical valuation measures. So Musk continues to level to the longer term as a purpose for traders to purchase or proceed to carry their inventory. Tesla stated that it’s anticipating to provide robotaxis in quantity in 2026, although Musk has lengthy been cheerleading robotaxis and different guarantees, resembling humanoid robots, to hype the inventory.
In the meantime, the CEO’s brother, Kimbal Musk, has bought practically $43 million in inventory from November 2024 to February 2025. And he’s solely one in all a number of insiders who’ve been promoting Tesla shares.
So with what seems to be an arguably overvalued inventory and Musk’s continued involvement with Trump, traders have to be particularly cautious with Tesla inventory. The carnage might get lots worse. Musk presents large key-man threat to the corporate, together with the huge variety of shares he’s pledged.
Editorial Disclaimer: All traders are suggested to conduct their very own unbiased analysis into funding methods earlier than investing resolution. As well as, traders are suggested that previous funding product efficiency is not any assure of future worth appreciation.
