Why Tesla shares remain popular with AJ Bell customers despite disappointing financial results

Tesla’s first-quarter delivery and production numbers on 2 April were as ugly as its Cybertruck design. That meant expectations were rock-bottom in the run-up to its financial results and it’s why the shares didn’t tank upon release of the Q1 earnings on 23 April.

The shares moved higher following the financial results, predominantly driven by the news that Tesla chief executive Elon Musk plans to spend less time helping the US government, implying he’ll have more time to help steer the electric vehicle company back on track.

There is a lot of work to do. First-quarter operating income fell by 66% year-on-year because of lower average vehicle selling prices, a decline in vehicle deliveries and an increase in expenses.

Competition has been fierce, the Cybertruck isn’t pulling its weight versus initial expectations, and there has been a backlash against the Tesla brand because of Elon Musk working with the Trump administration.

Tariffs threaten to cause further upset to Tesla’s earnings given the company imports around 70% of the parts it needs for its US factories. Potential disruption to global supply chains as a result of Trump’s trade war also creates risks to Tesla’s cost structure and ability to meet demand.

How are investors responding to Tesla’s fall from grace?

It’s remarkable how quickly Tesla’s brand has gone from being admired as a pioneer in the electric vehicle space to one that is seen by an increasing number of people as toxic. Musk has upset a lot of people due to his outspoken views and involvement with the US government.

Prior to the Q1 financial results, Tesla’s shares had more than halved in value since last December as the market priced in a plethora of bad news.

While Tesla’s name might be mud to some, certain individuals are spotting an opportunity. More DIY investors using AJ Bell’s platform have bought Tesla shares than sold every quarter for the past 12 months.

The buy to sell ratio has consistently risen each month so far in 2025. There were 3.2 people buying Tesla shares over the past month (to 21 April 2025) for every seller on AJ Bell’s platform. That compares to 2.5 in the previous month and 1.6 in the month before that one.

Certain investors might take the view that Tesla’s significant share price decline has gone too far and they’re buying on the dip, hoping for a bounce-back.

While Tesla’s shares are down approximately 50% since mid-December 2024, they are still ahead by nearly 400% over the past five years.

Opportunistic investors buying on the recent dip might view the recent sell-off as a once-in-a-lifetime chance to pick up shares in a previous stock market darling on the cheap. After all, the fundamentals still give bulls something to get excited about. It’s clear the long-term direction of travel for four-wheeled transportation is likely to be electric.

Why did Tesla’s shares go up after the Q1 results?

Musk’s association with Trump was initially seen to be advantageous as it might give the entrepreneur – and Tesla by default – preferential treatment. That fraternity has subsequently backfired when it comes to investor sentiment. Some people thought Musk was spending too much time away from Tesla and letting the company lose its way, others took objection to Musk’s involvement with Trump because their political views didn’t align with the current administration.

It became clear that Musk had to decide where the bulk of his time would be spent – the government or Tesla. We now have the answer.

Tesla’s shares barely moved in after-market trading immediately after its Q1 results, but they spiked later during the conference call when Musk revealed his intentions to dial down Doge involvement. It’s effectively the start of a journey for Musk to begin regaining the market’s trust.

The next step is to prove to the world that Tesla can have mass-market appeal. Tesla has a plan in motion to offer more affordable vehicles, but the market is still waiting for the finer details to judge whether the cheaper models can pave the way to the company reclaiming its glory in the EV space.