Tesla Stock Holds Losses Overnight: Did Early Trump Tariff Benefits Make Q1 Look Stronger Than They Were?

• CFO Vaibhav Taneja confirmed on the earnings call that Tesla recorded over $250 million in tariff-related benefits from duties paid earlier.
• Short seller Jim Chanos noted that $860 million of the $941 million in operating income was attributable to non-recurring items.
• Tesla trades at 191x forward earnings, far above other “Magnificent Seven” peers in the 22x-33x range.

Shares of Tesla, Inc. (TSLA) held losses at nearly 2% overnight on Thursday as analysts suggested that one-time tariff and warranty adjustments played a major role in the company’s first-quarter (Q1) earnings beat, putting the quality of the results under fresh scrutiny.

Tesla reported Q1 adjusted earnings per share (EPS) of $0.41, ahead of the $0.36 consensus estimate, while revenue of $22.39 billion came broadly in line with expectations.

TSLA stock snapped two sessions of losses on Wednesday to end 0.3% higher at $387.51.

Analysts Flag One-Time Items Behind TSLA Earnings

Short seller Jim Chanos, the founder of Kynikos Associates, said on X that most of the company’s operating income came from non-recurring items, including tariff recognitions, warranty reserve reversals and regulatory credit sales.

“$860M of the $941M of Operating Income was from disclosed one-time items… The Company was barely profitable from core operations in the 1Q.”

In February, a ruling by the U.S. Supreme Court invalidated certain tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act, potentially making importers eligible for refunds estimated at about $166 billion to $175 billion. U.S. Customs later opened a claims portal just days before Tesla reported earnings, allowing companies to seek reimbursement on previously paid duties.

Tesla CFO Vaibhav Taneja also confirmed during the earnings call that the company recorded tariff-related benefits tied to duties paid in earlier periods.

“We set yet another record with gross margins in this business over 39.5% due to some one-time benefits from certain tariff recognitions of more than $250 million from certain tariffs which we had paid in prior quarters,” Taneja said. He added that tariffs continue to have an outsized impact on Tesla’s energy segment, as many battery cells are sourced from China.

Separately, Gordon Johnson of GLJ Research estimated on X that the combined tariff and warranty adjustments lifted gross margin by $480 million, masking weaker underlying profitability. He said that excluding those items, Tesla’s earnings would have fallen short of consensus expectations, and margins would have declined from the previous quarter and not improved.

“These 1-time benefits also made $TSLA's margins look MUCH better than they ACTUALLY were,” Johnson said.

Missing Reserve For FSD Upgrades

Investor focus also shifted to Tesla’s disclosure that earlier vehicles equipped with Hardware 3 cannot support unsupervised Full Self-Driving (FSD) capability. CEO Elon Musk said on the call that “Hardware 3 simply does not have the capability to achieve unsupervised FSD.”

Tesla said customers who purchased FSD will be offered discounted trade-ins or hardware upgrades that require replacing computers and cameras, with upgrades expected to be handled through new microfactory deployment centers in major metropolitan areas.

Johnson said that Tesla’s acknowledgment raised questions about whether the company should already be recognizing reserves for the expected upgrade costs. “There is pretty clear accounting here. Whether $TSLA calls it warranty or exchange… they know how many cars need to be exchanged and how much of a reserve they have to take. ANY OTHER company would take a reserve for this. AMAZING!!!” 

Tesla Valuation Stretches Far Beyond Big Tech Peers

TSLA stock trades at about 191x forward earnings, far above its “Magnificent Seven” peers, which currently trade in a 22x to 33x range.

George Noble, a former associate of Peter Lynch at Fidelity Investments, said on X that he is short on Tesla, calling the EV maker’s valuation “wildly overvalued.” He also said: “The share price is sustained only by narratives and dreams,” while noting that 86% of the company’s revenue comes from autos and related services.

He also questioned expectations around near-term robotaxi commercialization, saying Tesla does not yet have the necessary approval from Texas for paid, unsupervised robotaxi rides and that deployment could still take years. Noble added that “investors increasingly ain’t buying the hopium that Elon Musk is selling,” and argued that “fair value is maybe $50.”

How Do Retail Traders Feel About TSLA?

On Stocktwits, retail sentiment for TSLA has been ‘extremely bullish’ in the week leading up to its Q1 print amid a 328% jump in 24-hour message volumes.

One user said, “This is overvalued. I won't consider turning bullish until we're under 300.”

Meanwhile, a bullish user said, “He's gonna drop FSD in a few months, so no one will get a chance to buy its stock. He keeps sending updates on computer 4, and we've only gotten a few for computer 3. So it feels like he's focusing more on computer 4 to make FSD more powerful.”

So far this year, TSLA stock has lagged its “Magnificent Seven” peers, making it the group’s worst performer, with a 14% decline.

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