Al Root

Tesla stock was rising in early trading Friday, the day after President Donald Trump's tariff shock.

While investors adjust to the global trade bombshell, Wall Street is adjusting to DOGE news. CEO Elon Musk might be stepping back from his Washington, D.C. responsibilities and spending more time in Austin, Texas, soon.

Shares of the electric vehicle maker were edging up 0.6% at $268.90, while S&P 500 and Dow Jones Industrial Average futures were dropping 0.7% and 0.9%, respectively.

Shares plunged 5.5% on Thursday, while the Roundhill Magnificent Seven ETF and Nasdaq Composite dropped 6.9% and 6%, respectively. Trump's Wednesday evening tariff announcement simply surprised investors. The levies were much higher than expected, with "reciprocal" tariff rates adjusted for "currency manipulation and trade barriers."

The Thursday drop obscured Wednesday's 5.3% gain for Tesla stock, which came despite disappointing delivery numbers. Tesla delivered some 337,000 cars, about 40,000 less than Wall Street expected and about 50,000 fewer than the first quarter of 2024.

News from Politico that Musk might end his DOGE career early -- not deliveries -- sent shares higher. Investors have worried for weeks the chief executive's political activities have been hurting Tesla's brand. That is why even unconfirmed reports sent shares higher. The White House called Politico's scoop "garbage."

Garbage or not, Wall Street appears to believe it's time for Musk to step back from DOGE.

Stepping back matters because it's a crucial time for Tesla, said Morningstar analyst Seth Goldstein. Deliveries fell 13% year over year, and Tesla is supposed to be launching a new vehicle and a robotaxi service in 2025.

"With Musk spending considerable time helping the US government, the market may have questioned if Musk was distracted from his role in leading Tesla," added Goldstein in his Wednesday report. His fair value for Tesla stock is $250 a share.

Wedbush analyst Dan Ives wrote on Wednesday that Musk "slowly but surely moving away from his leadership position in DOGE" is very bullish for Tesla. He rates shares Buy and has a $450 price target for the stock.

Guggenheim analyst Ronald Jewsikow channeled rapper Eminem reviewing DOGE news. "Guess who's back? back again. Elon's back" wrote Jewsikow, playing on lyrics from the star's Without Me track. "We would note this was already hinted at as early as last week...the narrative is a clear positive for Tesla, could soften some of the political backlash/perceived backlash, and could improve employee morale."

Jewsikow rates shares Sell and has a $170 price target for shares.

What is a DOGE retreat worth to Tesla stock? That is hard to say. Tesla stock was about $425 a share before the Jan. 20 presidential inauguration. (At the time, first-quarter delivery estimates were closer to 450,000 vehicles.) Tesla stock closed on Thursday below $270 a share.

BofA strategist Savita Subramanian noted earlier this week that fund managers have been selling Tesla stock since the election. Some of that institutional selling might have been due to tariff fears or profit-taking. Some is likely because of Musk, and some of that money coming back could boost shares.

In the longer term, any rebound will depend on car buyers returning. Is any brand damage permanent? It's hard to know now. Still, CFRA analyst Garrett Nelson sees a sales rebound in the second quarter.

Tesla shareholders will hope he's right.

Nelson rates shares Buy and has a $360 price target for the stock.

Write to Al Root at allen.root@dowjones.com

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April 04, 2025 04:35 ET (08:35 GMT)

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