Why Tesla Stock Shot Higher After Elon Musk's Comments

Not many people expected an earnings beat from Tesla's (NASDAQ: TSLA) first-quarter report last night. The results were even worse than anticipated in many respects. Yet Tesla stock soared Wednesday morning. As of noon, the stock was trading higher by 6.7%.

The source of investor optimism was in the company's earnings call to discuss the results. Some think the worst may now be over for the stock after shares have plunged almost 50% off the highs reached late last year.

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Elon Musk to spend more time on Tesla

The stock had been dropping as investor concerns grew over the amount of time CEO Elon Musk was spending in his role as head of the cost-cutting, efficiency-boosting Donald Trump initiative called DOGE (Department of Government Efficiency), and the negative reaction to his government work. In the conference call, though, Musk said a large part of his work "is mostly done." Musk also said that beginning in May, "my time allocation at DOGE will drop significantly."

That isn't all that has investors feeling better about buying Tesla shares. In its report to shareholders, the company said, "plans for new vehicles, including more affordable models, remain on track for [the] start of production in the first half of 2025." That means some version of what could be called a "Model 2" will be revealed in about two months.

Tesla still faces speed bumps

That's big news for Tesla investors as falling sales of its current electric vehicle (EV) lineup caused it to miss earnings and revenue estimates in the first quarter. Deliveries dropped 13% year over year, and revenue dropped 9%.

A cheaper model might help spur sales. But Musk's political activity has also alienated some potential Tesla buyers. Longer-term goals, which include a full self-driving cybercab and a fleet of humanoid Optimus robots, are what investors really want to see materialize.

Until those products become a reality, investors should expect a volatile road for Tesla stock. For today, though, buyers are far outnumbering sellers.

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Howard Smith has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.