Nasdaq 100: Tesla Surges 5% Pre-Market as Musk Vows to Refocus After Weak Earnings

Tesla Stock Rallies Despite Sharp Earnings Miss as Musk Vows to Refocus on EV Business

Tesla shares jumped over 5% in pre-market trading Wednesday after a bruising first-quarter earnings report revealed a 20% plunge in auto revenue and a 71% drop in net income. The rally came not from financial results, which missed Wall Street expectations on all major metrics, but from CEO Elon Musk’s pledge to spend less time on political ventures and more on core business operations.

Why Did Tesla Miss Expectations So Badly?

Tesla posted earnings per share of 27 cents, well below the 39-cent consensus, with revenue totaling $19.34 billion against an expected $21.11 billion. Automotive revenue came in at $14 billion, down from $17.4 billion a year earlier, as the company faced declining deliveries, factory retooling, and heavy price cuts. Margins also took a hit, with operating income down 66% to $400 million and auto gross margin excluding credits dropping to 12.5%.

Sales incentives and lower average selling prices weighed on profitability, and without $595 million in regulatory credits, the auto business would have posted a loss. Tesla cited production line updates and a challenging macro environment, including U.S.-China tariff tensions, for the decline.

So Why Is the Stock Rising?

Investors appear to be betting on Musk’s re-engagement. During the post-earnings call, Musk announced he would reduce his time spent on the Trump administration’s government efficiency project—DOGE—and redirect focus to Tesla. He still plans to devote 40% of his time to the initiative, but the perception that he’ll be more involved in Tesla’s operations was enough to spark a relief rally.

The company also reaffirmed timelines for key future projects. Tesla said it remains on track to launch a low-cost EV in the first half of 2025 and a pilot robotaxi service in Austin by June. While management acknowledged the need to revisit growth guidance next quarter due to tariff-related uncertainty, investors were encouraged by signs of operational continuity.

What Should Traders Watch Now?

Tesla’s bounce came despite its worst quarterly auto revenue drop in over five years. With margins under pressure and full-year growth outlook now unclear, the next major catalyst will be execution on the affordable EV launch and the robotaxi rollout. Musk’s time allocation will remain under scrutiny. Traders will also keep a close eye on tariff developments and June’s Q2 guidance update, which could clarify the demand picture and capital spending plans heading into the second half.

More Information in our Economic Calendar.