A prominent Tesla analyst is calling Elon Musk's distractions from the company a "code red" situation. And other S&P 500 analysts agree, although they're using numbers instead of colorful language.
Analysts slashed their first-quarter earnings forecast on Tesla by 10.6% in just a month, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. And their first-quarter profit estimate of 47 cents a share is down nearly 46% in just a year.
Such a rapid profit downgrade is evidence of how fast analysts think Tesla's future is dimming. The company not only has a CEO distracted by a role with the Trump administration but also a trade war with China, slowing sales and more competition.
"We are now at a major crossroads for the Tesla story in our view ... as since Musk joined the Trump administration," said Dan Ives, analyst at Wedbush who said Tesla is in a code red situation.
Tesla's Waning Profit Future
Tesla's fast-sinking forecasts for first-quarter profit are dramatically worse than the S&P 500.
Analysts think the S&P 500's profit will rise 7.2% in the first quarter, says John Butters of Factset. That's exactly what they were expecting a month ago, he says.
And it's not just a rough month for Tesla. For the full year, analysts think Tesla will earn $2.51 a share. That's down 6% from forecasts a month ago. And it's nearly 35% less than what analysts expected a year ago. Tesla is certainly not one of the stocks analysts think will profit most from the rest of the presidential term.
Looking At Tesla's Chart
Investors are already knocking Tesla shares down to compensate for falling profit. Shares of Tesla are down 44% this year.
The drop in the share price shaved off trillions of market value from the company. And it has pushed its RS Rating to just 62. Meanwhile, the one bright spot — earnings growth — is evaporating. Analysts think the company will only make 42 cents a share, down 6% from the same year-ago period.
"We view this as a fork in the road time: If Musk leaves the White House there will be permanent brand damage," Ives said. "But Tesla will have its most important asset and strategic thinker back as full time CEO to drive the vision and the long term story will not be altered."
Cutting Tesla Profit Forecasts
| Estimate made | Q1 EPS ch. % to now | 2025 EPS ch. % to now |
|---|---|---|
| 1 month ago | -10.6% | -6.0% |
| 2 months ago | -20.8% | -11.6% |
| 3 months ago | -40.8% | -23.0% |
| 6 months ago | -39.1% | -20.1% |
| 9 months ago | -47.5% | -27.7% |
| 12 months ago | -45.5% | -34.8% |
