Tesla Shares Rise Despite Profit Plunge, Musk to Shift Focus to Company

AUSTIN, Texas — Tesla‘s stock climbed Wednesday, buoyed by comments from CEO Elon Musk during Tuesday’s earnings call, despite a disappointing first-quarter financial report.

The electric vehicle maker reported a significant 71% drop in profits for the first quarter, falling to $409 million, or 12 cents a share. Revenue also declined, dropping from $21.3 billion to $19.3 billion year-over-year, which missed analyst estimates. Musk attributed some of the downturn to his political involvement, stating he would refocus on Tesla starting May.

On the earnings call, Musk said, “Now that the major work of establishing the Department of Government Efficiency is done, I will be allocating far more of my time to Tesla.” He plans to dedicate just a day or two per week to government responsibilities, emphasizing his commitment to lead the company back to growth.

Dan Ives, an analyst at Wedbush, noted that investors wanted to see Musk’s recommitment to the company as a positive sign. Following the call, Tesla shares gained more than 5% during after-hours trading.

Despite the stock’s rise, it remains down over 40% for the year. Analysts from Morgan Stanley, Deutsche Bank, and Bank of America maintained their price targets at $410, $345, and $305 respectively. Ives has increased his target to $350.

Musk also reaffirmed Tesla’s plans to introduce a cheaper version of the Model Y SUV and is optimistic about launching a paid driverless robotaxi service in Austin by June. “There will be millions of Teslas operating autonomously in the second half of the year,” he stated.

However, some auto analysts, including Sam Abuelsamid from Telemetry Insight, expressed skepticism about Musk’s predictions regarding full autonomy, citing safety concerns and uncertainties surrounding the technology.

Furthermore, Tesla faces increased competition from rivals like BYD, which has developed rapid-charging batteries. The company’s reputation has also taken a hit due to Musk’s political stance in Europe, further complicating the company’s market position.

In addition to declining sales, Tesla faces challenges from tariffs and regulatory scrutiny concerning its driver-assistance technology. The National Highway Traffic Safety Administration is currently investigating concerns regarding Tesla’s Autopilot feature and its Full Self-Driving system.

Despite these challenges, Tesla managed to generate $595 million from selling regulatory credits, an increase from last year. The company also reported a significant cash flow of $2.2 billion compared to $242 million the previous year, indicating some financial resilience.

As Tesla navigates these turbulent waters, analysts will be watching closely to see if Musk’s renewed focus can turn around the company’s fortunes.