Tesla shares saw a brief rally on Wednesday after Elon Musk promised to step back from his political activities and renew his focus on the electric vehicle maker. But while the pledge temporarily calmed Wall Street nerves, many retail investors and analysts believe the move is coming far too late—and it may not be enough to reverse the damage already done to Tesla’s reputation, fundamentals, and stock value.
The Tesla CEO, during the company’s earnings call, said he would reduce his involvement in the Department of Government Efficiency (DOGE) beginning in May. The department, though unofficial and symbolic, had come to embody the CEO’s flirtation with politics and public policy interests that investors say have distracted him from Tesla’s day-to-day operations.
Musk’s political leanings and unfiltered presence on X, which he acquired in 2022, have become a source of tension with investors and consumers. Tesla’s once-pristine image has grown increasingly polarizing, particularly among environmentally conscious liberals, a key customer base for electric vehicles.
Register for Tekedia Mini-MBA edition 17 (June 9 – Sept 6, 2025) today for early bird discounts. Do annual for access to Blucera.com.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register to become a better CEO or Director with Tekedia CEO & Director Program.
“Right, why do people think Elon and his insanity being at full on display at Tesla is going to help the company sell more cars to liberals?” one user on the retail trading forum r/WallStreetBets wrote.
Markets React, but Sentiment Still Weak
Wednesday’s modest rebound in Tesla’s share price did little to quell the grim reality: the stock is still down more than 35% year-to-date, and nearly 60% below its all-time high. Investors have been increasingly rattled by what they see as Tesla’s fading growth story, with first-quarter earnings underscoring the seriousness of the challenge ahead.
Tesla reported $19.3 billion in revenue for the quarter, missing analysts’ expectations of $21.4 billion. Automotive revenue plunged 20% year-on-year, and margins continued to shrink in the face of price cuts and intensifying global competition. Deliveries, the most closely watched metric by investors, also fell for the second consecutive quarter.
Even Tesla’s newer ventures, like its Optimus humanoid robot project, have been hit by external shocks. Musk revealed earlier this week that the production of Optimus has been affected by China’s restrictions on rare earth exports—an area where China holds near-monopoly control. The restrictions are part of Beijing’s retaliation in its ongoing tariff war with Washington, which analysts say is beginning to take a deeper toll on U.S. tech companies.
According to Musk, Chinese authorities want assurances that rare earth magnets used in Tesla’s robots won’t be diverted for military use. While he insisted that the materials are solely for industrial robotics, export approval is now tied to licensing from China’s Ministry of Commerce—a bureaucratic obstacle that could delay Tesla’s plans to scale Optimus in its EV factories.
Traders Aren’t Convinced
For many traders, Musk’s pledge to refocus on Tesla is seen as little more than damage control. The sentiment on forums like r/WallStreetBets remains deeply skeptical.
“Too late dude. The damage is done,” one user wrote. “If you think Q1 is bad, just wait for Q2.”
Others warned that Tesla’s price-to-earnings (P/E) ratio—still inflated relative to peers—would come under pressure as the company’s earnings growth slows and competitors flood the EV market with cheaper alternatives.
“There’s nothing unique in the pipeline,” another user said, pointing to the lack of new mass-market products from Tesla in recent quarters. Delays to the Cybertruck stalled robotaxi development, and tepid enthusiasm around the Optimus prototype have all contributed to a sense of drift at a company once hailed as the future of transportation.
The glut of used Tesla vehicles hitting the market, particularly in the U.S. and Europe, is also fueling anxiety. As demand softens, resale values have dropped, undercutting confidence in Tesla’s pricing power and the long-term value proposition of its cars.
Analysts Lower Expectations
The disappointment in Tesla’s earnings has reverberated across Wall Street. Goldman Sachs, RBC Capital Markets, and Cantor Fitzgerald were among the firms that trimmed their price targets for the stock, citing declining margins, weakening demand, and Tesla’s decision to rescind its forward guidance for 2025.
Steve Westly, a former Tesla board member, told CNBC’s Closing Bell Overtime that Musk’s re-engagement with Tesla might help steady the company in the near term, but that a broader strategic shift will be needed to reignite growth.
For a company that once defied gravity, both in terms of valuation and public perception, Tesla is now grappling with a new, more sobering reality.
Musk insists that Tesla will recover and expand into robotics and autonomous technology. But as the stock continues to languish and consumer sentiment drifts, investors are increasingly asking a more uncomfortable question: has Tesla peaked?