There's no question that Tesla (TSLA +7.57%) has had an eventful 2025 so far.
As Chief Executive Officer Elon Musk opened with on the April 22 earnings call, "Well, it's never a dull moment." Tesla, no stranger to controversy in ordinary times, has become a lightning rod this year largely due to Musk's work with the Department of Government Efficiency (DOGE), an ad hoc organization that President Donald Trump has tasked with cutting federal government spending and payrolls.
As a result, the company and the stock have become something of a Rorschach test for how you view Musk, meaning it doesn't behave like a normal stock.
With many Tesla owners taking steps such as affixing bumper stickers to their cars that disassociate them from Musk and make it clear that they don't approve of his actions or politics, some Wall Street observers have come to see him as a liability for the company.
On the other hand, Musk still has plenty of fans, and while many of those would prefer he step back from politics, it's clear that they still believe in him to guide the company forward.
In fact, more than anything right now, Musk's credibility and his promises about fully autonomous vehicles are providing the buoyancy that's keeping Tesla's stock price elevated despite the business's recent underwhelming performance. If Musk loses that credibility, the stock -- which is already down by about 40% from its late 2024 peak -- is likely to plunge.
Image source: Tesla.
Tesla's unusual quarter
Tesla just reported one of the worst quarters in its history. The disappointing results were widely expected after the company in early April reported a 13% decline in first-quarter deliveries.
However, even with that warning, the EV maker still missed estimates by a wide margin. Overall revenue fell 9% to $19.4 billion, well below the average estimate of $21.4 billion, and adjusted earnings per share fell from $0.45 in the prior-year period to $0.27, also missing estimates of $0.42 by a wide margin.
Additionally, Tesla declined to reaffirm its original forecast for delivery growth of 20% to 30% this year, a goal it now seems unlikely to reach given consumer backlash against the brand.
Despite the results and the lack of meaningful financial projections, the stock still jumped during the trading session that followed the update, gaining 5.4% on April 23.
Those gains seemed to come largely due to spin-doctoring by Musk. Management spent little time on the earnings call discussing the brand crisis that had led to vandalism at Tesla dealerships and charging stations, and a 20% decline in automotive revenue in the first quarter. Tesla, which has an unusual earnings call format in which investors can submit questions online before analyst questions are taken, did not even receive a question about the seeming collapse in the brand.
Instead, Musk reaffirmed the company's plan to launch a robotaxi network in Austin, Texas, in June, starting with 10 to 20 Model Y vehicles, and said it would quickly ramp up the numbers from there. In fact, he predicted that robotaxis would move the "financial needle significantly" by the second half of the next year -- a vague outlook, but one that implies a rapid deployment of self-driving vehicles. The Tesla chief also again said that he expected the company to eventually be the most valuable company in the world.
NASDAQ: TSLA
Key Data Points
What's Tesla really worth?
Tesla appears to be on course for its second straight year of declining vehicle deliveries.
However, investors seem to have stopped valuing the company as a carmaker and have instead bought into Musk's promises of a future where the world is blanketed by Tesla robotaxis. That could happen, but buying into that vision requires a person to accept several assumptions, including that Teslas will be able to safely drive themselves, that regulators will be amenable to the expanded use of autonomous vehicles, and that competition in the self-driving car sector will be limited.
Because of the unusual nature of Tesla's earnings calls, Musk hasn't been pressed to answer any questions from analysts about those specific assumptions, and his predictions that Tesla will become the world's most valuable company seem to be treated as gospel.
At this point, Tesla seems to be valued more on Musk's hype and forecasts rather than any measurable fundamentals in the business. That may be good news for Tesla shareholders, as it shows that as long as investors believe Musk's promises, there will be a floor under the stock.
That could eventually change, but after the latest report, it's clear that it will take more than just a quarter's worth of bad results to shift the narrative. Still, if the robotaxi launch and ramp-up don't go according to his aspirational plan, Musk may have a harder time keeping the share price aloft.
