Why Tesla Shares Are Rising Ahead of the Company's Earnings Report and Elon Musk's Critical Earnings Call
Tesla shares rose nearly 5% ahead of its first-quarter earnings report, with analysts projecting earnings of $0.39 on $21.11 billion in revenue. Investors are focused on guidance and updates on future initiatives, including the cybertruck and self-driving cars. CEO Elon Musk's recent controversies have raised concerns about the brand's image, with a CNBC poll showing 47% of Americans view Tesla negatively. Despite the stock's rise, caution is advised due to potential market reactions and ongoing challenges in the EV sector.
Shares of the electric-vehicle (EV) company Tesla (TSLA 4.71%) traded nearly 5% higher, as of 2:26 p.m. ET today. The company will report its first-quarter earnings results after the market closes, followed by a conference call that will likely feature CEO Elon Musk.
All eyes on Musk
Tesla already disclosed earlier this month that deliveries came in around 337,000 for the quarter, one of the worst showings in over two years, so investors aren't overly concerned about the numbers. Wall Street analysts are projecting $0.39 of earnings on revenue of $21.11 billion.
Analysts and investors will be more focused on any kind of guidance provided by the company and any updates on Tesla's future initiatives, which are critical for the stock. Those initiatives include the company's cybertruck, more affordable vehicles, full self-driving cars, and robotics. The spotlight will be squarely on Musk, who has been embroiled in controversy ever since getting involved with the Department of Government Efficiency (DOGE), an initiative launched by President Donald Trump to rein in government waste.
Some analysts and investors believe Musk's involvement has had a negative impact on the Tesla brand and contributed to the company's recent struggles. They have called for Musk to step down from DOGE and refocus on the company. A recent CNBC poll released today found that about 47% of Americans have a negative view of Tesla.
Don't try to time this one
While it may be tempting for investors to try and trade a key event like an earnings report, I wouldn't recommend it, in general, because it's always tough to know how the market will react. In this case, it's especially difficult, considering investors expect a bad quarter, and the reaction to the stock will largely depend on how investors interpret Musk's comments during the call.
I continue to avoid Tesla for now, given weakness in the core EV business, uncertainty about future initiatives, and an elevated valuation of 94 times forward earnings.