Musk Rejects Rumors of Departing US Government – Tesla Stock Drops 3.5% Following Consecutive Target Reductions

This is not investment advice. The author holds no positions in any of the mentioned stocks.

In a surprising twist, Tesla’s stock experienced a rebound despite reports suggesting that Elon Musk might soon sever ties with the U. S.government. Following these rumors, the stock climbed close to 5%, even though the company fell short of expectations with only 336, 681 vehicle deliveries in Q1, significantly lower than the anticipated 377, 000. This surge comes amid mixed signals from analysts and a firm denial from the White House, which characterized the Politico report as baseless.

Analysts Downgrade Tesla Amidst Rumors of Musk’s Departure

Shortly after the White House dismissed the report as “garbage, ”Musk took to his social media platform to label the claims as “fake news.”This public defense seemed to bolster investor sentiment temporarily, with Tesla’s shares closing up 5.3% for the day. Nevertheless, this increase was overshadowed by two separate analyst downgrades earlier in the day—CFRA and Truist both cut their price targets for Tesla stock to $360 and $280, respectively.

CFRA’s analysis pointed to the disappointing delivery numbers and revised its earnings per share (EPS) estimates for 2025 and 2026 down to $2.45 and $3.60, based on lower delivery forecasts. They noted that the ongoing transition for the Model Y across Tesla’s factories had led to production delays that negatively impacted overall sales volume.

Image shows Elon Musk denying a report saying he'll leave the Trump administration — Elon Musk refutes claims about stepping away from his administration role. Image: Elon Musk/X

While CFRA remains optimistic about a rebound in Q2 deliveries, Truist has urged stakeholders to consider the future potential of Tesla’s Full Self-Driving (FSD) technology, suggesting that upcoming updates are critical for the stock’s long-term value. Despite the delivery drop, Truist maintained a Hold rating on the shares, while CFRA retained its Buy rating.

In contrast, Dan Ives from Wedbush, a prominent advocate for Tesla, maintains an Outperform rating with a price target set at $550. Yet, he expressed disappointment regarding the company’s Q1 results, equating them to a substantial letdown. Ives highlighted a concern that Musk’s increasing political activities, including involvement with DOGE, could negatively impact the Tesla brand’s reputation.

According to Ives, the weak performance in Q1 represents a pivotal moment for Musk, who must navigate these challenges effectively to steer Tesla back toward a more favorable trajectory. The day ended with Tesla’s stock changing course during after-hours trading, dipping by 3.5% in response to Musk’s polarizing comments.

For ongoing updates and further analysis, follow the developments surrounding Tesla and Musk’s roles within both the corporate and political spheres.

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