NEW YORK — Tesla stock swung wildly in trading after the electric-vehicle maker reported a 71% plunge in first-quarter profit, forcing investors to reassess one of Wall Street’s marquee growth stories. CEO Elon Musk’s promise to pull back from his controversial government post and refocus on the company only added to the volatility, April 23, 2025.
Why Tesla’s stock is swinging so wildly
Net income for the quarter fell to $409 million, down 71% from about $1.39 billion a year earlier, according to a quarterly SEC filing and Tesla’s earnings materials. Overall revenue slid roughly 9% to about $19.3 billion, while automotive sales dropped around 20% as vehicle deliveries fell 13% to approximately 337,000 — the company’s weakest quarter in nearly three years.
The company’s own disclosures and coverage by ABC News tie much of the slide to softening demand, a bruising price war, and an “anti-Musk” backlash that has sparked protests and vandalism at Tesla showrooms. Tesla has also warned that tariffs and shifting global trade policies are clouding its outlook, even as its energy-storage division continues to grow.
Musk promises to refocus on the core business.
On the earnings call, Musk said the “major work” of building the Department of Government Efficiency, or DOGE, was largely complete and that his time on government duties would soon drop to “a day or two a week,” allowing him to spend more time at Tesla. He framed the shift as essential to stabilizing the automaker after a year of declining sales and bruising political controversy.
Investors initially seemed relieved. After the earnings call, Tesla stock erased earlier losses and closed nearly 8% higher as traders bet that more hands-on leadership could help repair the brand, Reuters reported. Even so, the shares remain down roughly half from their record high in December, shaving more than $500 billion off Tesla’s market value and underscoring how fragile sentiment around the company has become.
Profit warning years in the making
The 71% plunge in profits did not come out of nowhere. As early as April 2023, Reuters warned that aggressive price cuts were squeezing Tesla’s profit margins, even as deliveries hit new highs. By October of that year, other analysts were flagging a 37% drop in adjusted profit and eroding operating margins as the company pursued volume at the expense of profitability.
By early 2024, the pattern had hardened. Another Reuters report highlighted that automotive gross margins had fallen to the high teens from the mid-20s a year earlier, even before the latest downturn in sales. In 2025, Tesla repeatedly missed profit expectations despite record revenue, as higher tariffs, fading U.S. EV tax credits, and heavier spending on AI and robotics kept margins under pressure.
What comes next for Tesla stock
For now, Tesla is leaning on its energy business and promising robotaxi and humanoid-robot programs to justify a valuation that still prices the company at a hefty premium to traditional automakers. But Wall Street analysts have warned that those long-term bets cannot fully offset a shrinking EV business unless Tesla stabilizes sales and rebuilds its brand.
That leaves Tesla stock trading as a referendum on Musk himself: whether he truly shifts his attention back to cars and batteries, tempers the political fights that have alienated many buyers, and delivers new, more affordable models on time. Until investors see evidence of that pivot, the dramatic reaction to this quarter’s 71% profit plunge suggests volatility will remain the defining feature of Tesla stock.
