- Tesla has missed first-quarter earnings and revenue expectations but gross margins beat forecasts
- The company warns that a ‘rapidly evolving trade policy’ presents risks to its costs and product demand…
- …but says it is on track to start production on more affordable models in the first half of 2025
- The fact Tesla’s share price has halved since mid-December 2024 has put the stock on certain investors’ radar as they go bargain hunting
- Three times as many AJ Bell DIY investors bought Tesla shares than sold them over the past month
“Tesla’s first-quarter delivery and production numbers on 2 April were as ugly as its Cybertruck design. That meant expectations were rock-bottom in the run-up to its financial results and it’s why the shares didn’t tank upon release of the Q1 earnings,” says Dan Coatsworth, investment analyst at AJ Bell.
“Tesla’s problems are mounting up. Competition has been fierce, the Cybertruck isn’t pulling its weight versus initial expectations, and there has been a backlash against the Tesla brand because of Elon Musk cosying up to the Trump administration.
“Tariffs threaten to cause further upset to Tesla’s earnings given the company imports around 70% of the parts it needs for its US factories. Potential disruption to global supply chains as a result of Trump’s trade war also creates risks to Tesla’s cost structure and ability to meet demand.”
How are investors responding to Tesla’s fall from grace?
“It’s remarkable how quickly Tesla’s brand has gone from being admired as a pioneer in the electric vehicle space to one that is seen by an increasing number of people as toxic. Musk has upset a lot of people due to his outspoken views and quest to obtain and keep a seat at the White House high table.
“Tesla’s shares have more than halved in value since last December as the market prices in a plethora of bad news.
“While Tesla’s name might be mud to some, certain individuals are spotting an opportunity. More DIY investors using AJ Bell’s platform have bought Tesla shares than sold every quarter for the past 12 months.
“The buy to sell ratio has consistently risen each month so far in 2025. There were 3.2 people buying Tesla shares over the past month (to 21 April 2025) for every seller on AJ Bell’s platform. That compares to 2.5 in the previous month and 1.6 in the month before that one.
“Certain investors might take the view that Tesla’s significant share price decline has gone too far and they’re buying on the dip, hoping for a bounce-back.
“While Tesla’s shares are down approximately 50% since mid-December 2024, they are still ahead by nearly 400% over the past five years.
“Opportunistic investors buying on the recent dip might view the recent sell-off as a once-in-a-lifetime chance to pick up shares in a previous stock market darling on the cheap. After all, the fundamentals still give bulls something to get excited about. It’s clear the long-term direction of travel for four-wheeled transportation is likely to be electric.
“Musk’s association with Trump was initially seen to be advantageous as it might give the entrepreneur – and Tesla by default – preferential treatment. That fraternity has subsequently backfired.
“Reports suggest that Musk may soon leave the White House inner circle and such a move could be viewed positively by financial markets. One could argue that taking government work off Musk’s plate and freeing him up to get back to the day job is what’s needed to win back the market’s favour.
“The other thing investors desperately want from Tesla is the magic formula for a creating a more affordable electric vehicle that comes with enough bells and whistles to lure people in and sell by the bucketload. Tesla has a plan in motion but the market is still waiting for the finer details to judge whether the cheaper models can pave the way to the company reclaiming its glory in the EV space.”
