Tesla shares sank nearly six per cent on Easter Monday, leaving investors braced for what analysts have called a “code red” moment for Elon Musk’s firm ahead of its first quarter earnings announcement.
The electric vehicle (EV) giant is facing mounting concerns over failing sales, geopolitical headwinds and evolving criticism of Musk’s political involvement, which analysts say is damaging brand perception in key global markets.
Tesla stock closed Monday at $227, down 5.75 per cent.
The decline follows a downgrade from Wells Fargo, which issued a fresh ‘sell’ rating citing weak vehicle deliveries and uncertain near-term outlook.
The stock has dropped around 44 per cent year to date, making it the worst-performing member of the so-called magnificent seven tech stocks in 2025.
“Tesla’s quarterly numbers will be in focus later, as investors look to assess the financial impact of the electric vehicle manufacturer’s slumping deliveries”, said Russ Mould, investment analyst at AJ Bell.
Tesla’s first quarter earnings are expected to show a sharp drop in performance. Consensus estimates forecast earnings per share of $0.44 and revenue of $21.43bn, which would make it the firm’s weakest quarter since early 2021.
Earlier this month, Tesla reported a 13 per cent year on year drop in global deliveries – its worst delivery performance since 2022 – amid declining demand in major markets like California and Germany.
Tesla’s challenges extend beyond vehicle performance and production issues. The brand has become increasingly polarising, with Musk’s close ties to president Donald Trump and his leadership in the controversial “department of government efficiency” drawing public scrutiny.
Josh Gilbert, market analyst at eToro, cited “poor vehicle deliveries, auto tariffs and visionary CEO, Elon Musk, taking his eye off the ball from Twitter to SpaceX to DOGE.”
Survey data indicates growing reputational risk: repeat buyer rates have declined significantly in blue-leaning US states, and over 30 per cent of surveyed consumers say they would not consider a Tesla due to Musk’s political affiliations.
Wedbush analyst Dan Ives, long known as a Tesla bull, warned in a recent note that the firm faces a “code red situation”, if Musk continues to prioritise political engagements over company leadership.
“The turnaround vision must start on Tuesday’s earning call”, Ives said. “If Musk chooses to stay with the Trump white house it could change the future of Tesla.”
What’s more, Trump’s recent tariffs are adding to Tesla’s woes.
The US administration has floated the possibility of hiking import duties on Chinese EVs, prompting questions about retaliatory measures that could hit Tesla’s operations in China – where it builds cars for export to Europe and other markets.
Investors will be looking for updates on Tesla’s long promised lower-cost EV model and its robotaxi platform – two pillars of the company’s future growth strategy.
Musk has previously committed to launching this more affordable model by mid-2025, a simplified and more affordable variant of the Model Y, but delays in production were recently reported.
Tesla has not provided a timeline for the roll-out of either initiative, heightening anticipation around today’s earnings call.
Investors will be watching closely not only for the numbers announced later today, but for signs that Musk is willing to re-calibrate focus toward core operations and reassert leadership at a time when Tesla’s brand equity and competitive position appear under strain.
Following Tesla’s report, other major tech firms like Alphabet and Amazon will deliver their own earnings updates later this week.
By City AM
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