Tesla Investors Wanted 1 Major Thing From Elon Musk, and They Just Got It

Investors expected disappointing results when Tesla (NASDAQ: TSLA) reported earnings Tuesday afternoon. Unfortunately, that's pretty much what they got. Revenue and earnings plummeted as the company faced a number of challenges, including high interest rates, a pause in production during part of the quarter, and macroeconomic uncertainty. But, on the bright side, investors also got the one thing many of them probably wanted the most: A promise from CEO Elon Musk that his time spent on President Donald Trump's DOGE (Department of Government Efficiency) initiative will soon drop off significantly.

While many of the headwinds Tesla has been facing recently have been due to macro factors, there's also a common viewpoint that some of the company's recent challenges are self-inflicted by a distracted CEO. Earlier this year, Musk stepped into a lead role in President Trump's DOGE initiative, and it's been taking time away from the electric-car maker. So Tesla investors warmly welcome news that the CEO has plans to pull back on this effort.

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Tesla shareholders want Elon Musk back

"I think starting probably in [...] May, my time allocation at DOGE will drop significantly," Musk said during Tesla's first-quarter earnings call this week. He went on to say that he will be allocating "far more" of his time to Tesla.

Musk's devoted attention couldn't be more timely. Even Musk admitted that the company is facing "some challenges..." But he encouraged investors to stay focused on the long-term. In addition, he once again emphasized that he believes the company could one day be "the most valuable company in the world by far."

For now, however, Tesla faces short-term challenges as it works to roll out autonomous driving capabilities, including an autonomous ride-sharing network. But Musk believes Tesla's research and development efforts today will lead to great financial results later on. During the call, he said that he expects the company's autonomous driving technology will have a material impact on the company's bottom line sometime around the middle or second half of next year. Tesla is hoping that as it showcases its technology, it will drive increased demand for its vehicles. In addition, the company expects a planned launch of a more affordable model later this year to help, too.

With all of these important initiatives underway, Tesla shareholders need Musk to devote most of his energy to the company as soon as possible -- and it looks like they're going to get what they want.

Climbing out of a pit

For now, Tesla's first-quarter financial results confirmed that the company is fighting an uphill battle. The company's revenue fell 9% year over year, driven by a 20% year-over-year decline in automotive revenue. A 67% increase in energy generation and storage revenue helped offset challenges in its auto business. But with the segment accounting for just 14% of total revenue, it wasn't enough.

Profitability suffered severely. With a decline in automotive revenue weighing on gross margin, earnings per share plummeted 71% year over year.

Given all of its near-term challenges, the company refrained from providing specific guidance for its expected growth in deliveries or revenue. Tesla said in its first-quarter update that it would revisit its guidance when it reports its second-quarter results. The company is likely hoping that a recently revamped Model Y, continued development of its autonomous driving technology, and the launch of a lower-cost model later this year will give the company more clarity about what growth could look like.

Meanwhile, Tesla investors can rest assured that the company is well-equipped to weather near-term challenges. Not only did Tesla continue generating positive free cash flow in its first quarter, but the company also has an excellent balance sheet with more than $37 billion of cash.

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Daniel Sparks and/or his clients have positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.