Tesla jumps 5% as Musk refocuses, markets relax despite profit drop
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Tesla stock rallied 4.6% on Wednesday in pre-market trading, defying a brutal earnings report that revealed a 71% year-over-year plunge in net income. The surge was fueled by two catalysts: CEO Elon Musk signaling a retreat from his federal role at the Department of Government Efficiency (DOGE), and broader market relief following President Trump’s assurance that Fed Chair Jerome Powell will remain in his post.
The numbers were stark. First-quarter earnings per share fell to $0.27, well below the $0.39 consensus estimate. Revenue declined 9% year-over-year to $19.3 billion, missing expectations of $21.1 billion. Automotive revenue slid 20% to $14 billion, while net income dropped to $409 million—down from $1.4 billion a year earlier—making this Tesla’s worst quarterly profit performance since 2022. The company attributed the revenue decline to ongoing factory upgrades for the refreshed Model Y, coupled with reduced average selling prices and aggressive discounting.
Yet despite these weak fundamentals, the stock caught a bid. Musk told analysts he plans to step back from his duties at DOGE, a quirky and controversial federal initiative that had consumed significant executive bandwidth. Investors welcomed this pivot, viewing it as a renewed focus on core operations at a time when Tesla needs strategic clarity more than ever.
Markets were also buoyed by a broader shift in tone from Washington. After weeks of volatility driven by Trump’s threats against Powell and aggressive tariff rhetoric, the president’s decision to back off those stances sparked a market-wide risk rally. The announcement helped lift equities across the board, allowing even vulnerable names like Tesla to catch a tailwind.
Still, the backdrop remains challenging. Tesla shares are down 38% year to date, and the latest report confirms mounting pressure on both margins and volume. While bulls were quick to embrace the relief rally, the company’s fundamentals will need to show meaningful recovery in coming quarters to justify a sustainable rebound.
In the near term, investors will be watching for updates on Model Y production, pricing strategy, and whether Musk maintains his renewed operational focus. Until then, Tesla’s bounce may prove more sentiment-driven than structural—but in this market, even a hint of stability is enough to trigger sharp moves.
The numbers were stark. First-quarter earnings per share fell to $0.27, well below the $0.39 consensus estimate. Revenue declined 9% year-over-year to $19.3 billion, missing expectations of $21.1 billion. Automotive revenue slid 20% to $14 billion, while net income dropped to $409 million—down from $1.4 billion a year earlier—making this Tesla’s worst quarterly profit performance since 2022. The company attributed the revenue decline to ongoing factory upgrades for the refreshed Model Y, coupled with reduced average selling prices and aggressive discounting.
Yet despite these weak fundamentals, the stock caught a bid. Musk told analysts he plans to step back from his duties at DOGE, a quirky and controversial federal initiative that had consumed significant executive bandwidth. Investors welcomed this pivot, viewing it as a renewed focus on core operations at a time when Tesla needs strategic clarity more than ever.
Markets were also buoyed by a broader shift in tone from Washington. After weeks of volatility driven by Trump’s threats against Powell and aggressive tariff rhetoric, the president’s decision to back off those stances sparked a market-wide risk rally. The announcement helped lift equities across the board, allowing even vulnerable names like Tesla to catch a tailwind.
Still, the backdrop remains challenging. Tesla shares are down 38% year to date, and the latest report confirms mounting pressure on both margins and volume. While bulls were quick to embrace the relief rally, the company’s fundamentals will need to show meaningful recovery in coming quarters to justify a sustainable rebound.
In the near term, investors will be watching for updates on Model Y production, pricing strategy, and whether Musk maintains his renewed operational focus. Until then, Tesla’s bounce may prove more sentiment-driven than structural—but in this market, even a hint of stability is enough to trigger sharp moves.