Tesla Earnings Miss, But Musk Refocuses and Bulls React

Key Points

• Tesla missed Q1 expectations, but shares are bouncing post-earnings.
• Musk commits to refocusing on Tesla, calming investor political concerns.
• Analysts see the upside, with Wedbush raising its price target to $350.

Tesla Inc. NASDAQ: TSLA closed under $238 on Tuesday after gaining 5% ahead of its Q1 earnings report. When results dropped after the bell, the company missed both revenue and earnings expectations, but the market response has been surprisingly constructive. As of early Wednesday trading, Tesla looks set to open higher and possibly finish the week on a strong note.

That’s no small feat, considering the company is still down nearly 50% from its December all-time high. But there’s a growing sense that the worst might be over or, at the very least, that the damage has already been priced in. For investors trying to make sense of Tesla’s latest quarter, here’s what stood out and how to think about the setup from here.

The Numbers Were Soft, But Not a Shock

Tesla reported Q1 revenue of $19.34 billion, down more than 9% year over year and well short of consensus by more than $2 billion. Non-GAAP EPS came in at $0.27, missing by $0.15. The company cited a decline in deliveries and a broader Model Y update impacting output across all four vehicle factories.

Margins were also under pressure, driven by higher incentives and lower average selling prices, though Bank of America noted that the results were slightly better than expected. Operating expenses also ticked higher, with ongoing investment in AI and R&D continuing to weigh on short-term profitability.

For any other company, that kind of report might have sent shares sharply lower. However, for Tesla, which has already lost half its value and has weathered months of political drama, the bar was low, and investors seem to believe the worst is behind it.

Musk Promises to Refocus on Tesla

Perhaps the most important takeaway from the earnings call wasn’t the numbers—it was CEO Elon Musk’s tone. After months of distractions, controversy, and backlash related to his work with the Department of Government Efficiency, Musk told investors he plans to scale back that commitment drastically.

“My time allocated to DOGE will drop significantly,” Musk said, adding that by May, he expects to spend only a day or two a week on government issues. For a stock that has been battered not just by fundamentals but by optics and sentiment, this shift in messaging could prove meaningful.

Wedbush certainly thinks so. Analyst Dan Ives called the announcement an “off ramp” from the political chaos of the last few months and reiterated an Outperform rating. The firm also raised its price target from $315 to $350, citing renewed confidence in Tesla’s ability to reassert its global brand and focus on core growth areas. 

Analysts Remain Cautious on Tesla, But Optimistic

Other analysts were more measured. Along with a Buy rating, Morgan Stanley’s Adam Jonas acknowledged that the quarter wasn’t perfect and that consensus estimates will likely drift lower. Still, he highlighted Tesla's remained free cash flow positive and pointed to continued progress on autonomous efforts like the Cybercab and Optimus as reasons for optimism.

Bank of America stuck with its Neutral rating, noting that margins came under pressure but not as badly as expected. They cited elevated R&D spending as a near-term drag but acknowledged that Tesla’s AI investments may pay off down the line.

Despite the split views, the overarching theme is this: the miss was expected, sentiment was already depressed, and Musk’s pivot back toward Tesla could be the catalyst bulls have been waiting for.

What to Watch Going Forward

From a technical standpoint, Tesla has started to build a base. The $220–$230 zone has repeatedly attracted buyers, and with RSI climbing out of oversold territory and price beginning to trend higher, there’s a case to be made for a recovery leg, particularly if broader markets stabilize.

Much will depend on whether the market believes Tesla can reaccelerate growth in the second half of the year. But with the political cloud becoming clear and expectations reset, the stock could be setting up for a textbook post-earnings rebound.

Tesla’s Q1 earnings were messy but not catastrophic. And after months of selling, sentiment might finally be starting to turn. Musk’s renewed focus on Tesla, combined with the company’s still-dominant position in the EV space, gives the stock a fighting chance to regain its footing.