Tesla's Most Ardent Supporter Has Released an Emergency Alert Regarding Tesla Shares
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In the world of automobiles, Tesla (TSLA) rules supreme, boasting a whopping market cap of $834 billion. Yet, despite delivering monumental gains for long-term shareholders, this electric vehicle titan trades a staggering 50% under its 2025 highs.
Recently, analyst Dan Ives cautioned that Tesla is staring down a "code red scenario." Ives asserts that CEO Elon Musk stepping away from the political stage is critical to save the brand. According to Ives, Tesla's political symbol status globally has resulted in stock price drops, demonstrations, and a potential 15%-20% decrease in consumer demand.
Meanwhile, an up-and-coming Adobe-backed AI startup has skyrocketed 1,600%, dominating the digital ads sector, and even offering investment opportunities.
Tesla's Disappointing Q1
Tesla's Q1 results, revealed this week, fell short of expectations. Analytically speaking, earnings came up short, with adjusted earnings of $0.27 per share, well off the mark. Revenues were reported at $19.34 billion, short of projected expectations of $21.11 billion and declining 9% from the $21.3 billion seen in the same quarter the previous year.
Automotive revenue sank to $14 billion in Q1 from a robust $17.4 billion the year prior. Tesla attributed the drop to updates on its four vehicle factories for a revamped Model Y SUV, lower average selling prices, and increased sales incentives. Fiscal penalties also weighed on net income, which dove 71% to $409 million, or $0.12 per share, when compared with $1.39 billion, or $0.41 per share, in the same quarter the year before.
These underwhelming results come during tumultuous times for Tesla, with the stock down 30% year-to-date. The company has faced challenges such as Musk's political involvement, trade concerns, and demonstrations in the US and Europe.
Tesla's operating margin contracted to just 2.1%, with increased expenses related to artificial intelligence projects impacting the margin. Without regulatory credit sales of $595 million, Tesla would have lost money on automotive sales during the quarter.
A silver lining emerged in the energy generation and storage business, however. This division saw revenue soar 67% to $2.73 billion, thanks to rising demand for grid stabilization and power capacity solutions driven by the need for AI infrastructure.
Looking forward, Tesla declined to confirm its 2025 growth targets, stating it would revisit these targets in its Q2 update. It warned investors about increasing uncertainties in the automotive and energy sectors due to constantly evolving trade policies and changing political sentiment.
Tesla Short Sellers Pocket $11.5 Billion in 2025
Tesla short sellers have cashed in big in 2025 thanks to mark-to-market gains of $11.5 billion, according to data from S3 Partners. This windfall comes amid a 30% drop in Tesla shares so far this year, making it the biggest decliner among tech mega-caps.
Tesla's business fundamentals have faltered, with vehicle deliveries dropping 13% in the first quarter and increased competition from low-cost Chinese manufacturers. The company lags behind Alphabet's Waymo in the developing robotaxi market.
Tesla now ranks as the third most-shorted stock by value, with short sellers betting $17.6 billion on Tesla's struggles, trailing Nvidia and Apple.
Target Price for TSLA Stock
Although Tesla stock may remain volatile in the near term, analysts remain bullish on the EV giant. Despite mixed outlooks on target prices and operational stability, 16 analysts recommend "Strong Buy," with 10 recommending "Strong Sell" as of April 2025. The average target price for Tesla stock is $280.72.
Disclaimer: Aditya Raghunath did not have a position in any securities mentioned in this article as of the date of publication.
- Despite delivering significant gains for long-term shareholders, Tesla (TSLA) is currently trading 50% under its 2025 highs, a situation that analyst Dan Ives has warned could worsen due to Elon Musk's political involvement and potential consumer demand decreases.
- Meanwhile, an AI startup, backed by Adobe, has debuted via an IPO and has surged 1,600%, widely dominating the digital ads sector and offering investing opportunities.
- In Q1, Tesla's earnings and revenues fell significantly short of expectations, leading to a 71% drop in net income and raising concerns about the impact of trade concerns, political demonstrations, and Elon Musk's political involvement on the business.
- Energy generation and storage division, however, showed promising growth, with revenue increasing 67%, attributed to rising demand for grid stabilization and power capacity solutions driven by AI infrastructure.
- Tesla short sellers have achieved massive gains of $11.5 billion in 2025, as the stock has dropped 30% year-to-date, making it the biggest decliner among tech mega-caps, due to faltering business fundamentals and increased competition in the robotaxi market.
