Tesla stock recovers, then rallies despite Q1 delivery 'disaster'

Tesla reports Q1 deliveries of 336K, well below the 377K estimate.
Deliveries dropped 13% YoY and 32% from the recent quarter.
TSLA stock sinks 6% before rallying 5% as Trump says Musk is to step back from the DOGE role.
ADP Employment Change clobbered consensus, sending US stocks higher.

Clay Webster FXStreet

Tesla (TSLA) stock is having a bipolar day in the markets on Wednesday. First, shares of the US electric vehicle (EV) leader got trounced on news that deliveries in the first quarter hit their lowest level in three years. This sent shockwaves through the market, and TSLA stock collapsed more than 6% at the open to near $251.

Then heavy buying volume helped shares recover above $282, a more than 5% intraday gain so far. The gains began earlier but were helped when US President Donald Trump told reporters at the White House that Tesla CEO Elon Musk would be “stepping back” from his government operations role with the newly-created Department of Government Efficiency (DOGE) to return to managing his many businesses.

The broader market also gained strength ahead of the White House’s Liberation Day event at 4:00 PM EST, in which President Trump is expected to unveil new reciprocal tariffs. Ignoring the tariff announcement, the market has advanced on the March ADP Employment Change figure arriving above consensus. New hiring reached 155K, well above the 105K broad estimate and the upwardly revised 84K figure from February.

The Dow Jones Industrial Average (DJIA) rose 0.4%, while the NASDAQ climbed 0.7% at the time of writing.

Tesla stock news

Deliveries for Tesla in Q1 were reported at 336,681, well below the 377,000 figure that was expected by analysts. The delivery figure dropped 13% YoY and 32% QoQ.

Deliveries for Q1 had already been revised to be much lower due to news of flagging demand in China and Europe. Musk’s support of the Trump administration and his work directly with the President have hurt Tesla’s brand image as the White House has embarked on its trade war with other countries. It also didn’t seem to help things when Musk himself appeared to indulge in a Nazi-era salute to Trump supporters after the inauguration.

Deliveries of China-produced Teslas fell 11.5% from a year earlier, and many analysts voiced their concern about the challenging path to meeting Tesla’s full-year delivery roadmap.

The normally stalwart Wedbush Securities analyst Dan Ives called the delivery figure a “disaster”.

"Musk needs to stop this political firestorm and balance being CEO of Tesla with DOGE," Ives said in a client note.

Hargreaves Lansdown analyst Matt Britzman said that “the scale [of plunging deliveries] is worse than many had expected.”

The delivery estimates for the remaining three quarters -456,000, 497,000 and 544,000, respectively - have not seen revisions as of yet but look far-fetched at the moment. Much is riding on Tesla’s update to the Model Y vehicle.

In other news, Swedish insurer Folksam has sold its $160 million stake in Tesla due to Musk’s treatment of unionization and staunch opposition to collective bargaining. Additionally, on Tuesday, Wells Fargo came out with a $130 price target on TSLA stock, saying that the company was likely to see light delivery growth, increasing margin pressure and rising competition from China.

Tesla stock forecast

Tesla stock floundered before immediately gaining ground at the open on Wednesday. It is an unusual activity, to say the least.

As it stands, the TSLA stock is now looking much better from a technical perspective. It just needs to reach $288 in order to flip the 200-day Simple Moving Average (SMA). It has been trading below this important SMA since March 4.

Additionally, old resistance pressure at $265 did not factor into the price dynamic on Wednesday, and this or $222 remain key support levels. A break of the 50-day SMA, now at $313, is what's needed, however, to end the current malaise.

TSLA daily stock chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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