Tesla Stock Surges 10% Pre-Market Despite Q1 Profit Decline, Musk Refocuses on Core Business
2min read Tesla's stock price saw a pre-market surge on Wednesday, despite a significant decline in delivery volumes and profits for the first quarter. This upward movement was fueled by the company's emphasis on steady progress in its key projects related to autonomous driving and artificial intelligence. Although Tesla did not provide a full-year delivery guidance due to changes in global trade policies, investors were reassured by Elon Musk's commitment to focusing more on the company's core business.
During the earnings call, Musk announced that he would significantly reduce the time he spends on matters related to the government efficiency department. He stated that he would continue to dedicate one or two days a week to government-related affairs if the president requires it. This shift in focus has been well-received by analysts, who see it as a positive step towards stabilizing the company's operations and refocusing on its core competencies.
Wedbush Securities raised its target price for Tesla from $315 to $350, with analyst Dan Ives noting that this move allows Musk to step back from his involvement in government-related affairs. Ives highlighted that the past few months have been marked by global brand damage, political turmoil, and various chaotic situations, which are now expected to subside as Musk refocuses on Tesla's core operations. This strategic realignment is seen as a positive development that could drive future growth and innovation for the company.
Morgan Stanley, while cautioning that market expectations for Tesla may continue to decline, pointed out that the actual performance versus expectations remains within the lower range of buyer expectations. The firm also emphasized that Tesla maintained positive free cash flow for the quarter. Adam Jonas noted that Tesla's reaffirmation of its timeline for AI-related projects, such as Cybercab and Optimus, has provided some relief to investors. This reaffirmation is seen as a positive sign that the company is on track to deliver on its promises and continue to innovate in the field of autonomous driving and AI.
Bank of America, while acknowledging that Tesla's first-quarter performance was slightly better than expected, maintained a "neutral" rating on the stock. Analyst John Murphy indicated that Tesla's gross margin for the quarter was negatively impacted by increased promotional incentives and a decline in the average selling price of vehicles. However, these factors were offset by the company's investments in AI and other research and development projects, which led to an increase in operating expenses. This investment in innovation is seen as a positive development that could drive future growth and competitiveness for the company.
Overall, the shift in Musk's focus towards Tesla's core business, particularly in autonomous driving and AI, has reignited optimism among bullish investors. This strategic realignment is seen as a positive development that could drive future growth and innovation for the company. As Tesla continues to make progress in these key areas, investors are likely to remain optimistic about the company's prospects and its ability to deliver on its promises.
