TLDR:
- Tesla stock fell 1.1% in premarket trading after a six-day winning streak that saw shares rise 28.4%
- Despite poor Q1 results (65% drop in operating profit), investor sentiment improved after Musk promised to focus more on Tesla
- Tesla plans to launch robotaxi service in Austin, Texas in June with 10-20 Model Y vehicles
- The stock has seen extreme volatility, ranging from $157 to $489 over the past 12 months
- Musk’s credibility with investors may be Tesla’s greatest asset despite brand challenges and declining deliveries
Tesla’s stock retreated slightly in premarket trading on Wednesday, dipping 1.1% to $288.73. This minor pullback comes after an impressive six-day winning streak that saw shares climb 28.4%, starting just before the company’s first-quarter earnings report.
The electric vehicle maker’s recent performance has been a rollercoaster for investors. Tesla reported disappointing first-quarter results with operating profit of $399 million, down 65% year over year and well below Wall Street’s expected $900 million.
Revenue also took a hit, falling 9% to $19.4 billion, missing analyst estimates of $21.4 billion. Adjusted earnings per share dropped from $0.45 in the same period last year to $0.27, falling short of the $0.42 forecast.
Despite these lackluster numbers, investors responded positively to CEO Elon Musk’s statement that he would devote more time to Tesla and less to his role at the Department of Government Efficiency (DOGE) in Washington.
The Musk Factor
Musk’s influence on Tesla’s stock price cannot be overstated. His credibility with investors appears to be propping up the share price despite the company’s recent business challenges.
During the April 22 earnings call, Musk spent little time addressing the brand crisis that has led to vandalism at Tesla dealerships and charging stations. Instead, he focused on future plans.
The political involvement of Tesla’s CEO has turned the company into something of a Rorschach test for how investors view Musk. Some Tesla owners have even put bumper stickers on their cars to distance themselves from his politics.
Nevertheless, Musk’s promises about Tesla’s autonomous vehicle future continue to buoy the stock. He reaffirmed plans to launch a robotaxi network in Austin, Texas, in June.
The initial rollout will feature 10 to 20 Model Y vehicles, with plans to ramp up quickly. Musk predicted that robotaxis would move the “financial needle significantly” by the second half of next year.
Watching the Charts
Tesla investors have become accustomed to volatility. Prior to the recent earnings report, shares had dropped in 11 out of 13 weeks since President Trump’s inauguration, losing 43% over that period.
This decline effectively canceled out the 70% gain the stock had seen since the November presidential election. “The post-election swoon in Tesla basically marked a roundtrip of the fourth quarter rally,” noted Katie Stockton, founder of Fairlead Strategies.
Looking at longer-term patterns, Tesla stock entered both the week of the election and the week of earnings at roughly the same price point, around $250. This range-bound behavior suggests investors are waiting for the next catalyst.
That catalyst could be the anticipated robotaxi service. If Tesla meets its timeline for the June launch, investor sentiment might continue to improve.
Technical analysts point to $319 to $328 as the next hurdle for the stock. Over the past 12 months, Tesla shares have traded between approximately $157 and $489, showing extreme price swings.
As of Tuesday’s close, Tesla stock was down 29% year-to-date but up about 13% for April.
The Cybertruck was one bright spot in Tesla’s first quarter. Americans purchased 6,406 of them, representing a 129% increase year over year.
However, Tesla has declined to reaffirm its original forecast for delivery growth of 20-30% this year. With consumer backlash against the brand, reaching that goal seems increasingly unlikely.
Tesla appears to be on course for its second straight year of declining vehicle deliveries. Yet investors seem to have shifted from valuing the company as a carmaker to buying into Musk’s vision of a future dominated by Tesla robotaxis.
For this vision to materialize, several assumptions must hold true: Tesla vehicles must be able to safely drive themselves, regulators must allow expanded use of autonomous vehicles, and competition in the self-driving sector must remain limited.
As Tesla heads into Wednesday’s trading session, all eyes will be on whether the stock can resume its upward momentum or if the six-day winning streak marks the end of this rally phase.
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