MW Elon Musk is recommitting to Tesla, but will that save the stock? It's not so simple.

By Emily Bary

Tesla's stock is rising as investors cheer Musk's renewed focus on the company. But there are various challenges ahead, including tariffs, an evolving EV market and a history of delays on new products.

Tesla Inc. just posted a "disaster quarter," but its stock is starting to reflect optimism about what's to come. Is that sustainable?

Wedbush analyst Dan Ives cheered the "new chapter" ahead of Tesla - not just in terms of products and financials, but also in terms of the mature messaging from Chief Executive Elon Musk.

"More important than numbers, this was the time Musk could pivot, speak to shareholders/employees and take a turn away from the DOGE/Trump White House and recommit as CEO of Tesla," Ives said in a note to clients. Musk "did it loudly and clearly in a conference call that we view as a turning point in the Tesla story."

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Will renewed attention from the CEO be enough to turn Tesla's stock $(TSLA)$ around? While there are many challenges ahead for Tesla, Musk's intention to scale back his work with the so-called Department of Governmental Efficiency could flip sentiment for now. That said, Musk is only part of the equation, and there's only so much he can control.

Tesla's stock has been crunched in recent months, with investors panning Musk's DOGE involvement. That work was seen as a distraction from Musk's leadership of Tesla and also a risk to the brand, given its political nature.

But Tesla shares are up 7% in premarket action Wednesday, with investors more hopeful about the future.

Admittedly, Musk's actions now won't erase the damage done to Tesla's brand, and "there are still headwinds, tariffs and clear growth challenges for Tesla over the coming year," according to Ives. But at least the company is getting its CEO back at a crucial time, when it's trying to push forward with a lower-cost car and get a robotaxi business running.

Ives boosted his price target on Tesla's stock to $350 from $315 while keeping an outperform rating. Now, Ives said, the "disruptive-technology narrative takes hold" for Tesla's stock, rather than the political narrative.

Cantor Fitzgerald analyst Andres Sheppard also stayed bullish, noting that Tesla's 41% year-to-date stock slide heading into earnings likely offered an opportunity for investors. He was also encouraged by Musk's plan to dial back his DOGE work.

That said, Tesla isn't in the clear. "We do expect some consumer backlash from Elon's polarizing politics to continue to affect consumer demand, particularly in China and Europe," Sheppard wrote. "Furthermore, we expect backlash from President [Donald] Trump's tariff policies to also drive Chinese consumers to purchase non-American products, or in this case, Chinese products, over Tesla vehicles."

Meanwhile, the overall economic environment is uncertain, and Tesla's energy business is more exposed to tariff risk than its car business, Sheppard added.

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He maintained an overweight rating on the stock while lowering his price target to $355 from $425.

Needham's Chris Pierce kept a more measured view. "We're sensitive to short-term political headwinds hurting demand, but we've yet to hear a compelling reason why [Tesla] demand will bounce back quickly," he wrote in a note to clients.

From his perspective, Tesla's automotive business "continues to be under stress, with a demand rebound difficult to see" when he looks at first-quarter data on electric-vehicle adoption in California, which is a popular state for EVs. He thinks Tesla will need to ramp its promotional efforts even more, which could further weigh on margins. That would be on top of other margin pressure stemming from Tesla's Cybercab and low-cost-vehicle plans.

Pierce rates the stock at hold.

Colin Rusch of Oppenheimer is also staying on the sidelines, and he pumped the brakes on some of the optimism around things like Tesla's plan to launch a paid ride service in June in Austin.

"Given the long history of promises and delays on the technology, we believe the company is largely in show-me territory with investors," he wrote, while maintaining a perform rating.

-Emily Bary

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April 23, 2025 08:24 ET (12:24 GMT)

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