Tesla shares experienced a significant decline on Monday, April 21, 2025, dropping nearly 6% to close at $227.50. This downturn extends the company's year-to-date decline to a staggering 44%, as investors brace for the electric vehicle maker's highly anticipated first-quarter earnings report scheduled for later today.
The decline was exacerbated by a Reuters report from Friday, April 18, which revealed that Tesla is delaying the launch of its long-awaited lower-cost vehicle until 2026. Initially, the company had indicated that production would begin in the first half of 2025, with an expected price tag of around $30,000. Now, Tesla aims to produce 250,000 of these vehicles in 2026, a timeline that has left investors feeling uneasy.
Barclays also contributed to the market's unease by slashing its price target for Tesla from $325 to $275, citing concerns over lower vehicle deliveries and dwindling profit margins. The bank's actions came ahead of the earnings report, which is expected to reveal revenue of $21.24 billion for the first quarter, a slight drop from the same period last year, with analysts estimating earnings per share at 40 cents.
Adding to the pressure on Tesla shares are the ongoing political and economic factors surrounding the company. Wedbush analyst Dan Ives noted that "25% auto tariffs have been enacted delaying future lower cost models for Tesla," which has further complicated the company's prospects in a competitive market. Ives emphasized that the delays and tariffs could lead to a "permanent demand destruction" of 15% to 20% for future Tesla buyers due to the brand damage inflicted by CEO Elon Musk's political activities.
Investors are particularly concerned about the implications of Musk's involvement in the Trump administration, which has sparked significant backlash in Europe and parts of the U.S. This year alone, Tesla has faced protests, boycotts, and even criminal activity targeting its vehicles and facilities. In the first quarter, Tesla reported 336,681 vehicle deliveries, marking a 13% decline compared to the same period last year. This drop in sales has raised questions about the company's future as it navigates a challenging landscape.
Market analysts are keeping a close eye on Tesla's performance in China, where competition is intensifying and consumer sentiment is shifting. A recent survey by Caliber revealed that only 27% of respondents would consider purchasing a Tesla, down from 46% in January 2022. This decline in consumer interest is concerning, especially as Tesla relies heavily on its Chinese market for revenue.
As the earnings report approaches, analysts are anticipating a "dim" outcome, with consensus forecasts predicting the weakest bottom line for Tesla since the first quarter of 2021. The company's stock has now plummeted 53% from its all-time high set in December 2024, following a brief surge after Trump's election victory.
In the lead-up to the earnings call, investors submitted over 300 questions regarding Tesla's self-driving systems and around 200 inquiries about the company's Optimus humanoid robots. One investor even asked, "What steps has the board of directors taken to mitigate the brand damage caused by Elon's political activities?" This reflects the growing concern among shareholders about Musk's distractions and their potential impact on Tesla's brand and future sales.
Despite the challenges, some analysts remain hopeful for a turnaround. Ives stated that Tesla needs a "turnaround vision" from Musk during the earnings call, emphasizing that the company's future could hinge on how Musk navigates his political affiliations and their impact on the brand. The upcoming report will not only provide financial insights but also offer a chance for Musk to address the concerns surrounding his leadership and the company's direction.
As Tesla prepares to disclose its earnings, investors are left to ponder the implications of the company's recent struggles. The stock's performance will likely continue to be influenced by external factors, including political dynamics, market competition, and consumer sentiment. The outcome of today's earnings report could be pivotal for Tesla as it seeks to regain its footing in a rapidly evolving automotive landscape.
