Tesla (TSLA 5.50%) stock has moved in so many directions over the last few years, it's been hard to keep up. Between Jan. 1 and Oct. 31, 2024, Tesla's share price return was less than 1%. But following President Donald Trump's election victory on Nov. 5, Tesla stock kicked into another gear entirely -- rocketing more than 60% through December.
Tesla CEO Elon Musk's close ties to the Trump administration were initially seen as a coveted asset -- one that would pave the way for Tesla's autonomous driving ambitions thanks to a looser regulatory environment. Unfortunately, the bullish narrative has reversed course and Tesla stock is now in a free fall of epic proportions. As of 12:20 p.m. ET on April 7, shares of Tesla were down by 44% on the year -- making it the worst-performing member of the "Magnificent Seven."
Let's explore what is driving Tesla stock lower. More importantly, I'll detail what things investors should be keeping an eye on as the company's first-quarter earnings report looms on April 22.
NASDAQ: TSLA
Key Data Points
Tesla investors have endured a rough start to 2025
In a true moment of irony, Musk's alignment with the Trump administration has gone from being seen as a positive to a stark negative over the last few months. As a reminder, Musk is not just a surrogate for the president -- he's a "special government employee" now. After Trump won in November, he tapped Musk to lead the waste-cutting initiative called the Department of Government Efficiency (DOGE).
Over the last few months, Musk's efforts at DOGE have been polarizing among political activists. The result so far has been extreme damage to the Tesla brand, causing some investors to fear what demand for the company's vehicles could look like.
And speaking of demand trends, just take a look at the post below from Wedbush Securities analyst Dan Ives. For what it's worth, Ives is a longtime Tesla bull and often expresses support for Musk's leadership on social media. Even so, the sentiment expressed in the post makes clear that one of the most optimistic Tesla analysts on Wall Street is starting to get concerned.
We knew 1Q Tesla deliveries would be soft but these numbers were bad. We are not going to look at these numbers with rose colored glasses...they were a disaster on every metric. Refresh issues but brand crisis key. The time has come for Musk...fork in the road moment for Tesla
-- Dan Ives (@DivesTech) April 2, 2025
The storm could just be getting started
Tesla is scheduled to report first-quarter earnings following market close on April 22. While the poor delivery and production stats referenced above serve as a proxy for the tone of the report, it's hard to know with any accuracy just how poor the financial picture will be.
While it's entirely possible that the ongoing selling in Tesla stock right now is overdone, I have some trepidation over the upcoming earnings call and fear the stock could be headed much lower.
Image source: Tesla.
Is Tesla stock a buy before April 22?
This is not the first time that Tesla has faced a public relations crisis. And historically speaking, one thing that Musk has typically been great at is marketing. What I mean by this is that during past periods of uncertainty or turbulence at Tesla, Musk found ways to pump up investors.
In fact, he did this during the last Tesla earnings call back in January. Even though 2024 was not the best year for Tesla as a business, the stock still soared. In addition to the surge following Trump's reelection, Musk was able to distract investors from waning demand in the car business by talking at length about the company's pursuits in artificial intelligence (AI) -- namely the Cybercab robotaxi and Optimus humanoid robot.
While these endeavors are exciting, they are both part of the long-term thesis surrounding Tesla. My hope for the call later this month is for Musk to tame the souring investor sentiment by revealing an actual plan for what the company is going to do to rejuvenate the core electric vehicle business.
While I usually do not encourage timing your buying and selling, this is no ordinary time for Tesla. In my eyes, this particular earnings call is pivotal. I think the prudent idea is to see how Musk handles questions from analysts and listen closely to his rhetoric. Will he address the strategic issues at the company right now, or try to deflect by talking more about AI and the future?
I'd usually see now as a tempting opportunity to buy the dip, but I think the best strategy is to wait until after April 22 to potentially buy more Tesla stock depending on how the call goes.
