Tesla Stock Surges by 5% Following Q1 2025 Earnings Call

Yesterday, Tesla released the company’s Q1 2025 results, and by all accounts, this was one of Tesla’s worst financial performances in several years.

Tesla’s quarterly profits are down 71%, and in the first 3 months of the year, Tesla only made $400 million in profit.

Alternatively, consider another prominent tech company: Apple. In the most recent quarter for which financial results are available, Apple reported a profit of $36 billion.

Apple’s profit margin was 29% on $124 billion in revenue, while Tesla had only a 2.1% profit margin on $19 billion in revenue.

When comparing profits, Apple’s earnings are 72 times greater than Tesla's. However, in terms of market capitalization, Apple's $3 trillion market cap is just four times larger than Tesla's $785 billion market cap.

In other words, Apple’s market cap, which represents the cost to purchase every Apple share, is $3 trillion. This is 30 times Apple’s yearly profit. However, when comparing Tesla’s market cap to its yearly profit, Tesla is valued at 134 times its annual profit.

This means that if someone purchases Tesla outright, it will take that person 134 years to recoup their investment through profits.

This is to say that Tesla is valued significantly higher than the profit the company generates.

Some argue that Tesla is a tech company and shouldn’t be valued as an automaker, which typically carries a valuation of about five times their annual profit. However, with its current market cap, Tesla is valued considerably higher than even many tech firms.

Tesla’s remarkable valuation, compared to its current profits, stems from the view that it is a high-growth company and that this growth will eventually be reflected in its valuation over the coming years.

However, regarding the latest Tesla earnings, Tesla’s profits are down 71%, vehicle deliveries are down 20%, vehicle gross margin is reduced, and revenue has declined.

Overall, after its peak in 2023, Tesla has become a contracting business rather than a high-growth company.

However, as stated in the title, Tesla’s stock price rose by 5% after the EV maker announced these dismal financial results.

A 5% increase in Tesla's share price represents tens of billions of dollars added to the company’s market cap in a single day.

So what’s going on here?

One potential reason for Tesla’s stock price increase, despite its disappointing financial results, could be Musk’s declaration that he will be reducing his involvement in the Department of Government Efficiency to dedicate more time to Tesla.

Musk made this announcement at the very beginning of the earnings call.

This development has increased optimism among Tesla investors who believe the EV maker will benefit from Musk’s increased involvement at Tesla.

However, it is crucial to note that after a few weeks, Musk must legally step down from his role at DOGE.

Musk is able to serve as CEO of multiple companies and simultaneously work in government because of his status as a “special government employee.”

However, his status as a special government employee can only last for six months, at which point he’ll need to resign either from his government job or forgo his roles in his various companies.

It’s already been four months since Musk joined DOGE, and it means that in a few weeks, he’ll be legally required to leave the government.

However, despite this, Tesla investors appear pleased with the news that Musk will be leaving his position in the government, and the EV maker's stock has risen by 5% despite disappointing financial results.

Overall, it’s interesting to see how Tesla investors' reaction to the news that Musk will be leaving DOGE.

Some people believe that Musk’s role in the government is too critical, and Tesla is a worthy sacrifice for his DOGE work. However, please let me know what you think in the comments. Share your ideas by clicking the RED “Add new comment” button below. Also, be sure to visit our site, torquenews.com/Tesla, regularly for the latest updates.

Image: Courtesy of Tesla, Inc.

For more information, check out: Tesla Confirms the “New, Cheaper Vehicles” Under Development Are Just a Stripped-Down Model 3 & Y – Adds the Most Important Thing is “They’ll be Cheaper & You’ll be Able to Buy One”

Tinsae Aregay has been following Tesla and the evolution of the EV space daily for several years. He covers everything about Tesla, from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.