This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
Since the election, Elon Musk has spent weeks cozying up to President-elect Donald Trump, and speculation has run rampant on what the relationship could do for Musk’s businesses.
For starters, there are at least 20 ongoing federal investigations into his companies, according to Reuters, and the thinking is that those could see relief once Trump takes office.
All that speculation, though, is about the future. In the present (OK, now past if we’re quibbling), Tesla said it sold fewer cars than analysts predicted in the fourth quarter, posting its first year-over-year decline in deliveries in more than a decade.
The automaker’s stock fell 6% on the news, putting the stock down 18% since its last local high around Christmas (though it’s still up over 50% since the election).
As we’ve written before, Tesla trades as a sort of Musk hype proxy except for moments when investors are reminded that it’s still a car company with a day job selling cars. Sometimes that works, like when the shares spiked 22% after its last earnings report. Sometimes it doesn’t.
Of course, the faithful are unwavering. Our friend Dan Ives at Wedbush chanted his Musk mantra in a note following Thursday’s delivery numbers: “Over the last decade we have never viewed Tesla simply as a car company … instead we have always viewed Musk and Tesla as a leading disruptive technology global player and the first part of this grand strategic vision has taken shape over the past 5 years.”
He’s got plenty of company, and the belief — for now, it remains just a belief — that Tesla is destined for artificial intelligence and autonomous driving greatness drove the stock up 63% in 2024. The faith in the stock was further juiced by Musk’s $250 million donation to the Trump campaign and his ensuing appointment as co-DOGE-in-chief.
Taking a step back, Tesla has to be more than a car company to justify its valuation, especially if its numbers don’t meet estimates.
With Musk predicting that auto sales this year will rise by 20% to 30%, this year will stress-test this justification. And just how much the advantage of being “first buddy” is worth.
Julie Hyman is the co-host of Market Domination on Yahoo Finance. You can find her on social media @juleshyman.
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