Tesla Shares Rise After-Hours as Musk Says He'll Spend Less Time With DOGE
$Tesla Motors(TSLA)$
Shares rose 5.2% as Musk's reassurance outweighed the earnings and revenue miss posted by the company for the first quarter and the challenges that it said came with Trump trade policies.
Before the financial results were released, Tesla shares closed 4.5% Tuesday, recouping some of the losses the previous day when perennial bull Daniel Ives, an analyst at Wedbush and his colleague Sam Brandeis reportedly warned that the company faces a “code red situation,” unless Musk leaves his leadership role at DOGE and go back to leading his electric vehicle company full time.
The warning came from the analysts who continued to rate Tesla as “outperform” even as they noted that Musk's role at DOGE has damaged his company's brand.
"I think starting probably next month, May, my time allocation to DOGE will drop significantly," Musk told analysts during the company's earnings call. Still, he expects to continue to be involved with the department for the rest of President Donald Trump's term.
The assurance came after the company reported that adjusted earnings declined to 27 cents in the first quarter, from 45 cents a year earlier. That's lower than the 43 cents expected by analysts, according to Bloomberg consensus. Revenue dropped 9.2% to $19.34 billion, below expectations that called for $21.37 billion.
The company said it will revisit its guidance in its second quarter update, noting that "the rate of growth this year will depend on a variety of factors, including the rate of acceleration of our autonomy efforts, production ramp at our factories and the broader macroeconomic environment."
While Tesla CEO Elon Musk has been closely linked to the Trump administration, taking a leadership role at the Department of Government Efficiency, known as DOGE, that hasn't spared the electric vehicle maker from the challenges that came as a result of the sweeping tariffs imposed by US government.
"It is difficult to measure the impacts of shifting global trade policy on the automotive and energy supply chains, our cost structure and demand for durable goods and related services," the company said, even as it noted how it has been "making prudent investments that will set up both our vehicle and energy businesses for growth."
In early April, the company reported first quarter deliveries fell to 336,681 vehicles, from 386,810 a year earlier. That was worse than the average analyst estimate of 383,632 vehicles for the three months that ended March, according to Bloomberg consensus.
"Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025," the company said. "Our purpose-built Robotaxi product – Cybercab – will continue to pursue a revolutionary “unboxed” manufacturing strategy and is scheduled for volume production starting in 2026."
Before the results were released, Morningstar analyst Seth Goldstein wrote in a note to clients Monday that the company needs to launch its new affordable vehicle in order to increase deliveries, adding that Tesla's current product lineup is "near full market saturation in the luxury auto segment.”
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