Selling cars is not as good as selling dreams! Can Musk bring the next "disruptive story" to Tesla investors?

The Zhitong Finance APP noted that Tesla (TSLA.US) investors are once again looking forward to Elon Musk revitalizing the company when he announces earnings on Tuesday, after experiencing one of the worst quarters in the stock's history. The company's profits continue to decline, while the highly anticipated autonomous vehicles will not be available for several months.

Tesla has had a poor start to 2025, with Musk's political entanglements causing the company's sales in the first three months to drop to a nearly three-year low, leading many Wall Street analysts to significantly lower growth expectations. The bleak outlook and high valuation of the automaker have caused panic among investors, resulting in Tesla's stock price plummeting 53% since hitting an all-time high last December.

Dave Mazza, CEO of Roundhill Investments, which holds Tesla stock, stated, "Musk needs to step up during this earnings call to get the stock price out of its stagnation," adding, "While Musk is focused on his DOGE (Department of Government Efficiency) work, Tesla's stock has fallen into an information vacuum, and their car sales are declining, facing political resistance in important markets."

Boosting investor confidence largely depends on whether Musk will begin to reduce his involvement in the Trump administration and DOGE. After reports this month suggested a possible shift, the company's stock price rebounded despite weak sales data.

In addition, investors are looking for details on the autonomous vehicles set to launch in late summer this year, as well as any new models amid increasing competition from other electric vehicles globally.

Data shows that analysts expect Tesla's first-quarter profits to be lower than the same period last year, with revenue estimated to be flat compared to the previous year. Over the past month, analysts have significantly lowered their expectations, with profit forecasts down about 12% and revenue projections down more than 6%.

"For most, the key takeaway may be that 2025 is a transition year," said Gene Munster, co-founder of Deepwater Asset Management. However, Munster also expects this year to "lay the groundwork for a significant rebound in 2026 and beyond."

Tesla's stock price has plummeted this year, with market concerns about the damage Musk's political activities have caused to the company's brand and sales, while also exacerbating investors' broader anxieties about economic growth and U.S. trade policy. The stock price fell 36% from January to March, marking the third-largest quarterly decline since the company went public in 2010.

Despite this, the stock maintains a high valuation: Tesla's forward price-to-earnings ratio is 78 times, far exceeding the S&P 500 index's average of 19 times. This tech giant is often classified as a member of the "seven giants of U.S. stocks," rather than traditional automakers like General Motors, with the average valuation of the seven giants being only 23 times "Compared to the current financial report, Tesla's future is more important, as its stock value is primarily based on future expectations," emphasized Eric Shiff, CEO of Los Angeles private equity firm Patriarch Organization. "Among the seven giants, Tesla is the only company whose valuation almost entirely depends on future prospects."

Bullish investors believe that Tesla's autonomous driving technology could enable it to surpass competitors like Waymo, a subsidiary of Alphabet, with the robotaxi service launched in Austin in June serving as the first key test.

Shiff and other investors optimistic about Tesla pointed out that the company's autonomous driving technology has the potential to give it a dominant position among competitors like Waymo under Alphabet Inc. A few months later, when the company plans to launch its autonomous taxi service in Austin in June, this commitment will face its first real test.

Nevertheless, many investors and analysts remain concerned about the slowing growth of the company's core electric vehicle manufacturing business, which contributed 90% of its revenue last year. In addition to the overall slowdown in electric vehicle adoption, production halts, and brand damage caused by Musk's political involvement, the company's outdated product line is also dragging down sales.

Many fans are waiting for Tesla to announce new, more affordable models that can compete with low-cost rivals like China's BYD. In this regard, disappointing reports emerged last weekend that Tesla has delayed the production of its low-cost Model Y by at least three months. The initial plan was to launch the vehicle in the first half of this year.

"Telsa is facing increasingly weak fundamentals," said Barclays analyst Dan Levy, noting that the profit margins of the company's core automotive business are expected to hit a new low, and achieving sales growth this year may become increasingly difficult after a weak start.

However, Levy added, "The potential upward momentum for Tesla's stock price may come from Musk returning to work," stating that "a good narrative may outweigh weak fundamentals."