Tesla (TSLA, Financial) is heading into its Q1 earnings report under a heavy cloud, and Wall Street isn't feeling optimistic. After a sharp drop in vehicle deliveries, analysts are bracing for a notable hit to profits—and they're warning investors to prepare for more pain.

Morgan Stanley's Adam Jonas expects Tesla's auto margin to fall to just 12.7%, a level not seen since 2012 when the company was still delivering cars in the low thousands. That margin squeeze, plus a 10% slide in the stock over the past three trading days, has made Tesla the worst performer in the S&P 500 this week. Since Elon Musk took on his advisory role in the Trump administration, Tesla's market cap has shed more than $500 billion.

The company may be close to breaking even on free cash flow—or dipping below it—which could trigger restructuring later this year. But it's not all bad news. Revenue from self-driving tech in China and higher-than-expected emission credit sales could soften the blow.

Still, investors are focused on what comes next. They'll be listening closely on the earnings call for updates on robotaxis, affordable Model Y plans, battery supply hurdles, and most of all—how Musk plans to juggle his White House role and his CEO duties. Dan Ives at Wedbush called it a “code red” moment for Musk and Tesla. The big question: will Musk finally commit to turning his full attention back to the company?