Tesla’s Beleaguered Stock Faces Its Next Test: Earnings
Tesla investors are used to the unexpected when it comes to the electric vehicle company. But this earnings season, a little bit of certainty from Elon Musk and the rest of management could go a long way.
Tesla is scheduled to release first-quarter results after the close of Tuesday trading. Wall Street expects earnings of 36 cents a share from $20.1 billion in sales. That compares with earnings of 45 cents a share from sales of $21.3 billion in the same quarter a year ago.
Expectations have come down since the end of March, when Wall Street expected 48 cents in earnings. Estimates were ratcheted lower after Tesla reported a 13% drop in first-quarter vehicle deliveries. The company sold about 337,000 cars in the quarter, down from about 387,000 in the first quarter of 2024 and about 40,000 fewer than Wall Street’s projections. Weak sales figures fueled fears that Musk’s duties in the Trump administration were turning away core Tesla buyers: politically left-leaning drivers who are looking to go green.
There was another reason for the sales disappointment. Tesla updated its most popular vehicle, the Model Y. Model changeovers can create a dip in sales while production ramps up and car buyers wait for the newer version. For the second quarter, Wall Street sees a rebound with deliveries landing north of 400,000 vehicles.
While deliveries are known, costs and profit margin aren’t. Wall Street projects operating income of less than $1 billion and operating profit margin below 5%. That would represent the company’s worst quarter for margin since the first quarter of 2020.
Looking ahead, investors will want to hear about catalysts that can drive shares higher later in the year. Tesla is slated to launch a new, lower-priced model this year and start its robotaxi service around June. Any updates on those plans will affect how the stock trades after earnings.
Shares are beaten up heading into tonight’s earnings report. Coming into Tuesday trading, Tesla stock was down about 42% since the company reported fourth-quarter numbers in late January. That could work in investors’ favor: Shares are starting from a low place, making it possible for “better-than-feared” results to be enough to send the stock higher.
After the report, the focus turns to CEO Musk, who often speaks on the company’s earnings call. Investors want to hear he is engaged at Tesla and managing through tariffs, the trade war with China, and increased competition—no matter how much time he spends in Washington, D.C.