When Elon Musk warned in 2022 that political attacks against him would “escalate dramatically in the coming months,” many TeslaTSLA

shareholders could likely see what was coming. Indeed, the attacks did come — but not before its CEO struck first.

At first, that strategy paid off. As Musk would go on to cement himself a formidable force in the Republican party — declaring war against the “woke mind virus” and donating millions to prominent conservatives. For a while, it seemed the world’s richest man could not stop winning. But now, it’s costing him dearly.

Musk meltdown: In the immediate aftermath of Trump’s reelection to the White House, Tesla exploded in value, catapulting shares to nearly $500. However, Musk is now learning that ‘not all publicity is good publicity.’ Seen as an insular force in slashing public funding for research, global aid, and entitlement programs, Musk has soured the public’s perception of Tesla. And as it loses its progressive image, organized protests, vehicle vandalism, and boycotts have followed in its stead. In Tesla’s first-quarter earnings, reported Tuesday, we can see the consumer impact.

• Tesla’s auto revenues fell 20% year-over-year as Q1 vehicle production vastly outstripped deliveries — the automaker delivered 13% fewer cars year-over-year.
• Although the firm’s automotive gross margin (12.5%) beat expectations (11.8%), the slowdown weighed on Tesla’s GAAP net income — which fell 71% YoY.

Tesla Troubles

Tesla’s results were widely expected by the Street, which had downgrades-a-plenty in recent weeks — including from Wedbush permabull Dan Ives, who warns that Tesla faces a “code red situation” if Musk stays at DOGE. On the earnings call, Musk sounded a glum tone, declaring he will cut back on his work for the agency, as recent reports speculated, but it’s unclear what difference it will make now.

• Last month, Tesla’s impression among Americans hit an all-time low — especially among liberals and moderates, who are seen as more likely buyers of EVs than conservatives.
• Overseas, European sales are cratering and the China-US trade war is taking its toll — with the organization saying in its report that it’s “difficult to measure impacts of global trade policy.”

Decline to comment: Despite missing on revenue by over $2B and operating income by $900M, Tesla declined to issue new guidance, simply saying that the “rate of growth will depend on a variety of factors.” Left absent from its quarterly report were plans for a ‘return to sales growth’ — seen as a sign that the company was squarely focused on investments in its future. Those might include more investment in its energy generation division, a surprising bright spot in its report — or its long-overdue robotaxi or affordable low-cost Model Y. However, the auto leader says it will revisit its forecast in Q2.

The upshot:TSLA

rose 3.8% aftermarket, on top of a 4.6% intraday rise, but remains down ~37% YTD.