Elon Musk faces investor anger as Tesla's stock plunges amid leadership concerns

Elon Musk faces a difficult situation at Tesla as the company deals with falling sales, which a CNN report claims is a “consequence of his close relationship with President Trump. The automaker is caught in a bind due to the president’s trade war, creating a catch-22 situation for Musk: If he maintains close ties to President Trump, Tesla risks alienating potential customers who dislike the president's policies. However, distancing himself could incur White House anger. This predicament comes as Tesla reported its largest-ever drop in quarterly sales after years of growth, CNN notes, adding pressure on Musk ahead of Tuesday's earnings report and investor questions.

Analysts are rapidly downgrading Tesla's profit forecasts, with first-quarter earnings estimates slashed by 10.6% in just a month, according to Investors’ analysis of S&P Global Market Intelligence data. This dramatic reduction reflects how quickly financial experts believe Tesla's future is dimming amid multiple challenges. The company faces not only a CEO distracted by government duties but also trade war complications with China, slowing sales, and increasing competition in the electric vehicle market. The speed of Tesla's profit downgrade stands in stark contrast to the broader S&P 500, where analysts maintain steady expectations of 7.2% profit growth for the first quarter, Investors noted based on Factset data.

Tesla's actual first-quarter results missed expectations with revenue of $19.34 billion versus Bloomberg's estimate of $21.43 billion, a significant drop from the $21.3 billion reported a year ago, Yahoo Finance reports. The company also posted adjusted earnings per share of just $0.27, well below the $0.44 analysts had estimated. Tesla blamed "uncertainty in the automotive and energy markets" that is due to "rapidly evolving trade policy" that "adversely impacts the global supply chain and cost structure," a situation that could significantly affect demand for its products in the near term, says Yahoo Finance.

Despite these disappointing results, Tesla's stock rose 6% on Wednesday following the earnings call, primarily due to Musk's announcement that he would reduce his time at DOGE starting in May, Yahoo Finance notes. "Starting early next month, in May, my time allocation to DOGE will drop significantly," Musk stated, adding that while he would continue spending a day or two per week in Washington, he would be "allocating far more of my time" to Tesla. The company also confirmed plans to launch new affordable vehicles in the first half of 2025 and maintained its timeline for Robotaxi volume production starting in 2026, addressing two major investor concerns outlined in Yahoo Finance's coverage of the earnings call.