Tesla shares are rising despite a weak first-quarter performance marked by declining revenue, shrinking margins, and slowing demand for its electric vehicles globally.
The company’s automotive revenue fell 20% from the same period last year, while total revenue declined 9%. Net income dropped 70%, making it one of Tesla’s poorest quarters in recent years.
Still, the stock rally continues, buoyed by investor confidence in Elon Musk’s future vision.
Musk struck an optimistic tone during the earnings call.
However, Wall Street remains cautious, the current upswing appears driven more by renewed belief in Musk’s narrative than by fundamentals.
The stock was up close to 3% to trade at $258.14 in early trade on Thursday. The TSLA stock is down around 31% since the start of the year.
Wall Street is not convinced
Tesla’s Q1 earnings miss and escalating tariff risks have prompted a wave of downward revisions from Wall Street, with analysts signaling that a recovery may be farther off than previously expected.
CFRA Research downgraded Tesla to “Hold” and slashed its price target to $260.
The firm issued a stark warning: earnings per share may not return to 2023 levels until at least 2027.
That projection, coupled with mounting cost pressures and weakening EV demand, paints a picture of a prolonged recovery rather than a temporary setback.
Goldman Sachs followed with a price target cut to $235, citing “near-term risks to automotive gross margins.”
While the bank maintained a neutral stance and reiterated confidence in Tesla’s longer-term advantage in full self-driving technology, it acknowledged that this future catalyst looks increasingly distant in light of the Q1 figures.
Wells Fargo took the most bearish stance, cutting its target to $120 and maintaining an “underweight” rating.
Analyst Colin Langan flagged worsening fundamentals, particularly due to tariff exposure in Tesla’s energy business.
He also questioned the substance of the company’s promised affordable model, suggesting it’s likely a cost-trimmed Model Y.
Langan concluded, “We expect the stock to fade.”
TD Cowen, while trimming its price target to $330 from $388, remained bullish.
Analyst Itay Michaeli reaffirmed a “Buy” rating, arguing that despite worsening near-term fundamentals, Tesla’s longer-term innovation roadmap—centered around new EVs and robotics, still presents a compelling upside.
He likened the setup to last year’s low-sentiment rebound, viewing the current pessimism as a potential contrarian opportunity.
Will Elon Musk’s step back from the government fix Tesla’s problems?
Tesla CEO Elon Musk’s announcement that he will scale back his role at the Department of Government Efficiency (DOGE) next month and refocus on Tesla may not be enough to reverse the brand damage already done.
Musk told investors Tuesday night that he would spend just one or two days a week at DOGE going forward, devoting more time to the electric vehicle maker.
But the fallout from his controversial political alignment with President Donald Trump and leadership at DOGE has already weighed heavily on Tesla’s image.
The company faced protests outside showrooms and incidents of vandalism at its facilities.
More significantly, Tesla posted its largest-ever sales decline in the first quarter, driven by a sharp drop in demand, fallout that could have long-term implications.
Wedbush Securities’ Dan Ives—historically one of Tesla’s staunchest supporters—warned that “sales demand will be down 10% permanently” as a direct result of Musk’s political entanglements.
Ives wrote:
The brand damage caused by Musk in the White House/DOGE over the past few months will not go away just by this move, and some of the damage will be stained forever in Europe and the US.”
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