Market commentary by eToro analyst for Romania, Bogdan Maioreanu: Tesla profits down 71%, Musk is returning part-time to the company
Tesla is having a bad 2025, as CEO Elon Musk’s political involvement brought a widespread boycott and sales cratered. But investors were looking for a sliver of hope that a turnaround is in sight, as Musk vowed to dedicate more of his time to the struggling company.
Tesla’s Q1 earnings were disappointing, but shareholders received last night something that they were asking for a long time: Elon Musk’s attention. “DOGE work is mostly done and beginning in May, my time allocated to DOGE will drop significantly,” he said on the company’s Q1 earnings call. However, his DOGE activity will not cease but will be limited to two days per week and Musk’s time will not be entirely devoted to Tesla.
Tesla has addressed three big areas investors were fretting over. Tariffs are going to affect the business, more on the energy front than automotive. Frustratingly, its energy storage segment was a bright spot this quarter, with margins twice as high as automotive. Tesla’s more affordable vehicle is still on track to enter production in the first half of 2025, and Optimus and Robotaxi are still moving forward, which can be massive for future growth if the company will be able to deliver on its promises. And finally, Musk stepping back from DOGE is the much-needed relief for Tesla investors that could be a sign of better things to come this year.
Tesla is committed to launching a robotaxi service in Austin, Texas, in June 2025—just two months away. Initially, it will be a pilot programme with ten or twenty vehicles, but the long-term plan involves steering-wheel-free Cybercabs on-demand, significantly reducing the need for personal car ownership. Musk further predicts his humanoid robot, Optimus, will assume many daily tasks within five years. Investors will have to judge how realistic his vision truly is.
For now, Tesla Q1 earnings missed both the revenues and profits. The company’s profits were down 71% from the same quarter last year, earning just $0.27 per share, below the consensus estimate of $0.42 per share and down from $0.45 in the same quarter last year. Total revenue declined 9% to a below consensus $19.34B. Total automotive revenue was down 20% to $13.97B. Energy generation and storage revenue increased 67% while services and other revenue were up 15% from a year ago.
Despite the messy headline numbers, Tesla shares surprisingly rose by 5% in after-hours trading on the Nasdaq last night as investors seem to regain trust in the company’s outlook. Musk envisions a future where most people no longer buy their own cars but instead use robotaxis. He also sees a distant future dominated by humanoid robots, with Tesla positioned as the undisputed market leader, followed exclusively by Chinese manufacturers. Tesla’s roadmap for an affordable model and Musk’s renewed focus could give investors some confidence. Tesla was the most held stock by Romanian investors and the second most held internationally on the eToro trading and investing platform, at the end of last quarter.
But the road ahead isn’t without challenges, some Tesla related, other macroeconomic and geo-politic. Tesla’s decision to delay financial projections for 2025 by three months is understandable. During an earnings call, Musk stated that Tesla’s Optimus robot relies on rare metals sourced from China. Additionally, CFO Vaibhav Taneja explained that each Tesla in the US could become approximately $2,000 more expensive if all proposed import tariffs go into effect, despite 85% of components originating from within America itself.
Tariffs might take a toll on Tesla sales, Chinese manufacturers are posing an increasing threat for Tesla, there is no exact date for the retail release of the unsupervised Full Self Driving – the autonomous driving pilot of Tesla, and Optimus robot is still in development while at least two Chinese made humanoid robots are commercially available. Tesla still lacks the news that could show that its creativity is back but the outlook is somewhat brighter with Musk back behind the wheel. Despite numerous unfulfilled promises and significant brand damage due to Musk’s role in Trump’s government, Tesla investors clearly think it’s still too early to withdraw their support.
Bogdan Maioreanu, eToro analyst and markets commentator has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.
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23.04.2025 / Editor, Andreea Dragan
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