Tesla (TSLA) Stock: Investors Look Past Revenue Decline as CEO Promises More Attention

TLDR:

Tesla stock experienced a six-day 28.4% rally before dropping 1.1% in Wednesday premarket trading Q1 operating profit plunged 65% to $399 million, well under Wall Street’s $900 million expectation Musk announced plans to launch robotaxi service in Austin this June with 10-20 Model Y vehicles Tesla shares have traded between $157-$489 in the past year, showing extreme volatility Investor faith in Musk appears to outweigh concerns about declining deliveries and brand issues

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Tesla’s stock took a small step back on Wednesday morning, dipping 1.1% in premarket trading to $288.73. The slight retreat comes after an impressive six-day winning streak that saw the electric vehicle maker’s shares surge by 28.4%.

The rally began just before Tesla released its first-quarter results, which painted a less-than-rosy picture of the company’s current performance. The EV pioneer reported an operating profit of just $399 million, representing a steep 65% drop from the same period last year.

This figure fell far short of analyst expectations, which had pegged the number at around $900 million. Overall revenue declined 9% to $19.4 billion, missing the consensus estimate of $21.4 billion by a wide margin.

Adjusted earnings per share came in at $0.27, down from $0.45 in the prior-year period and well below the $0.42 that Wall Street had forecast. These numbers would typically send a stock tumbling.

Yet Tesla shares climbed anyway. The primary catalyst appears to be CEO Elon Musk’s announcement that he would scale back his involvement with the Department of Government Efficiency (DOGE) in Washington and devote more attention to Tesla.

Tesla, Inc. (TSLA)

The Future Over Financials

Investors seem more focused on Tesla’s future prospects than its current financial struggles. During the recent earnings call, Musk doubled down on the company’s autonomous vehicle strategy.

He confirmed plans to launch a robotaxi service in Austin, Texas, starting in June. The initial fleet will consist of 10 to 20 Model Y vehicles, with rapid expansion planned afterward.

Musk made the bold claim that robotaxis would move the “financial needle significantly” by the second half of next year. He also reiterated his belief that Tesla will eventually become the world’s most valuable company.

These forward-looking statements appear to carry more weight with investors than the company’s deteriorating present-day performance. The stock jumped 5.4% the day after earnings, despite the disappointing numbers.

Tesla has declined to reaffirm its original forecast of 20-30% delivery growth for this year. Given the 13% decline in first-quarter deliveries and ongoing brand challenges, reaching that target seems unlikely.

The Politics of Tesla

Tesla’s stock has become something of a political barometer in recent months. Following the November presidential election, shares surged approximately 70%, only to lose 43% in the weeks after President Trump’s inauguration.

This volatility has created an unusual situation where, after all the ups and downs, Tesla stock ended up at roughly the same price point. “If you remove the ‘mountain’ on the stock chart, you’d have a range-bound setup centered around $250,” observed Katie Stockton of Fairlead Strategies.

Musk’s political activities have created divisions among Tesla owners. Some have gone as far as placing bumper stickers on their vehicles to distance themselves from his politics.

Dealerships and charging stations have reportedly experienced vandalism due to the political backlash. Yet during the earnings call, these issues received scant attention, with no analysts asking about the apparent brand crisis.

Technical Patterns

Tesla shares have shown extreme volatility over the past year, with prices ranging from approximately $157 to $489. This $332 range represents more than 110% of Tuesday’s closing price.

Market technicians suggest that the next hurdle for the stock sits between $319 and $328. Breaking through this resistance level could signal further upside potential.

As of Tuesday’s close, Tesla stock was down 29% year-to-date but had gained about 13% during April. The recent rally suggests that investor sentiment may be improving.

There were a few bright spots in Tesla’s first-quarter report. The Cybertruck saw strong demand, with Americans purchasing 6,406 units, representing a 129% increase year over year.

However, the company appears headed for its second consecutive year of declining vehicle deliveries. This fundamental weakness makes the stock’s resilience all the more remarkable.

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