Tesla ($TSLA) reported disappointing Q1 earnings last week as vehicle consumption and investor support dips.
The company announced earnings per share were nearly 35% lower than expected and revenue missed forecasts by 9%. Tesla also reported a 13% drop in vehicle deliveries in Q1.
Musk may be partially to blame: his role in the government is proving unpopular for many. Large markets for electric vehicles, like Germany, are hesitant to support Tesla in light of Musk’s government involvement. Protestors rallied against Musk in early April. Many in the “Tesla Takedown” movement have targeted Tesla showrooms and charging stations across the US.
Another reason is that automakers in China and Europe are gaining an increasingly large share of global EV demand. We reported about Tesla’s slipping global sales in March. With the recent ratification of new tariffs, Tesla is also affected by the increasing investor uncertainty about the future of the US electric car industry.
In response, Musk addressed investor concerns about his ongoing involvement with $TSLA during the earnings call. He pledged to spend “significantly” less time working with the Department of Government Efficiency (DOGE) in the coming quarter.
These mitigation efforts may stabilize the stock. But $TSLA stock has already dropped 44% this year. Much of this stock erosion has been attributed to Musk’s political activities. Working with DOGE has alienated his traditional consumer base. It has also been unpopular among many investors. Since March, 75% of congressional trades of $TSLA have been sales. Net sales of $TSLA by insiders have also also spiked since his entrance into office: Net shares sold in Q1 is five-fold larger than this time last year.
The stability of Tesla ($TSLA) stock in Q2 of 2024 and onwards will depend on whether Musk can rebuild trust with investors. It will also depend on the effects of new tariffs on the vehicle manufacturing industry.
