That was interesting.
Tesla stock fell after first-quarterdeliveriesdisappointed, then jumped on news that CEO Elon Musk might step away from DOGE, and then dropped in after-hours trading, following President Donald Trump’s Wednesdaytariffs announcement.
Shares of the electric vehicle maker dropped 6% in premarket trading at $265.7. S&P 500 and Dow Jones Industrial Average futures were dropping 3.4% and 2.9%, respectively in Thursday’s premarket.
Recent whipsawing of shares shows just how much Tesla investors are trying to keep track of.
Take deliveries. Tesla delivered 336,681 vehicles in the first quarter. Results missed consensus estimates by more than 10% and some of the lowest analyst estimates by about 20,000 vehicles. Deliveries fell 13% year over year, the worst quarterly decline in the company’s history.
Baird analyst Ben Kallo wrote that a Model Y upgrade had an impact on production and, therefore, sales, adding the weak result fuels fears that Musk’s political activities were hitting demand. CFRA analyst Garrett Nelson cut his price target to $360 a share from $385 following the report. He’s still expecting a strong sales rebound in the second quarter. Canaccord analyst Geroge Gianarikas wrote “owie” in response to the results but added it was too early to tell if any brand damage done by Musk was permanent.
No one appeared happy with the number, but it did not matter. Politico reported that Musk was preparing to leave DOGE. White House press secretary Karoline Leavitt called the report “garbage.”
Tesla investors reacted with relief anyway. The company’s stock traded as low as $251.27 on Wednesday but closed at $282.76, up 5.3%.
Musk eclipsed deliveries, but then came Trump. His tariff announcements, which included steep levies on trade partners in China, were worse than feared. Apple, Alphabet, and Amazon.com stocks dropped 7.6%, 3.6%, and 5.8% respectively in after-hours trading.
Wedbush analyst Dan Ives called the announcement “worse than the worst-case scenario” in a Wednesday report. China and Taiwan face reciprocal tariffs of 34% and 32%, respectively. “Tech stocks will clearly be under major pressure on this announcement,” he added.
All that leaves investors asking: Now what?
For starters, investors will have to consider full-year delivery numbers for Tesla and the auto industry.
Tariffs raise the cost of cars and car parts. Higher costs can translate into higher prices. And higher prices can destroy demand. BofA analyst John Murphy estimates tariffs will reduce U.S. car sales by up to 3 million units. That will make life harder for Tesla, too.
(Americans bought about 16 million cars in 2024.)
Tesla has some offsets to industry weakness. It’s expected to launch a new lower-priced model and start a robotaxi service this year.
Deutsche Bank analyst Edison Yu expects the lower-priced model to roll out slowly, launching first in the U.S., followed by Europe, and then China. He doesn’t believe the new model won’t drive overall growth. Yu estimates that 1.7 million cars will be delivered by Tesla in 2025, down about 5% from the 1.8 million delivered in 2024.
Falling sales will be a headwind for the stock, leaving investors looking at robotaxis for relief. Tesla is expected to start a self-driving cab service in Austin, Texas, in June. That will be a big milestone for the company.
Before that, Tesla will report its first-quarter results on April 22. Investors will be looking for a robotaxi update as well as a discussion about sales volumes, tariff impacts, and, of course, what’s up with Musk.