1. Tesla shares fell nearly 6% on Monday, a day before the company announced its first-quarter earnings report.
2. Investors are looking for answers about CEO Elon Musk's plans for this automaker as he spends most of his time with the Trump administration, slashing the U.S. federal budget.
3. The company's stock has now fallen 44% this year after ending its worst quarter since 2022 in March.
Tesla's stock fell nearly 6% on Monday, a day before the electric vehicle company announced its first-quarter earnings report, as analysts expressed concerns about "ongoing brand erosion."
The stock closed at $227.50, less than $6 below the year's low on April 8. The stock has now fallen 44% this year after ending its worst quarter since 2022 in March. This is the 12th time this year that the stock has dropped at least 5% in a single trading session.
Many of CEO Elon Musk's distracting activities outside of Tesla, particularly his role in the Trump administration, are being scrutinized, along with the long-delayed progress on robotaxi technology and self-driving technology for the company's existing vehicles.
In the online forum that Tesla uses to gather investor questions before earnings calls, more than 300 questions were submitted regarding Tesla's self-driving system, around 200 questions about the company's developing humanoid robot Optimus, and more than 160 questions about Musk. One investor asked, "What steps has the board taken to mitigate brand damage caused by Elon’s political activities?"
After spending $290 million to help Trump return to the White House, Musk is now leading an initiative to cut tens of thousands of federal jobs, sell or terminate leases on federal office buildings, and reduce U.S. government capacity.
Musk's political views and erratic actions have sparked backlash in Europe and some parts of the U.S. This year, the company has faced a wave of protests, boycotts, and some criminal activities targeting Tesla vehicles and facilities in response to Musk.
Earlier this month, Tesla reported it delivered 336,681 vehicles in the first quarter, a decrease of 13% from the same period last year.
According to LSEG, the company is expected to report revenue of $21.24 billion in the first quarter, marking a slight decline from the same period last year. Analysts expect earnings per share to be 40 cents. Investors will be particularly attentive to any comments regarding Trump's broad tariffs and their potential impact on revenue and earnings as the year progresses.
Oppenheimer analysts wrote in a note released on Monday that Tesla's "ongoing brand erosion" in the U.S. and Europe is impacting sales, but that "a bigger issue for the company is that demand in China may weaken and impact margins due to Trump's tariffs."
They wrote that competition in China, along with the "nationalistic" consumer trend there, could "drive sales towards domestic brands." At that point, Tesla will have to export more cars manufactured in China, which could lead to "downward price pressure," Oppenheimer analysts said.
Caliber, a research company tracking changes in American consumer sentiment towards major brands, found that only 27% of survey respondents in March would consider buying a Tesla, compared to 46% in January 2022.
Wedbush Securities analyst Dan Ives, a long-time Tesla bull, is hoping for a "changing vision" from Musk in Tuesday's earnings report.
"Unfortunately, Tesla has now become the global political symbol of the Trump/DOGE administration," he wrote, noting that "Tesla's stock has plummeted since Trump returned to the White House."
Ives estimates that "the permanent demand from future Tesla buyers will decline by 15% to 20% due to the brand damage caused by Musk while working for Trump."
Last week, Barclays maintained their sell rating and cut Tesla's price target from $325 to $275, citing a "confusing setup" in the first quarter along with a "weak foundation". The firm stated they could see a positive reaction if Musk focuses more on his car manufacturer and depending on what the company reveals about the anticipated "FSD event", referring to Tesla's Full Self-Driving service.
When announcing the earnings date, Tesla stated that in addition to earnings, the company would provide a "live update on the company," which is language the company typically does not use in releases.
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