WSJ Tech News Briefing: TNB Tech Minute - Tesla Profit Slumps

Release Date: April 22, 2025
Host: Katie Dayton, The Wall Street Journal

Tesla's Struggles in the First Quarter

In the latest episode of the WSJ Tech News Briefing, host Katie Dayton discusses Tesla's disappointing performance in the first quarter of 2025. Tesla reported a 71% decline in income, falling short of Wall Street expectations. The electric vehicle (EV) giant's revenue decreased by 9% year-over-year to $19.3 billion, marking a significant downturn.

Key Factors Affecting Tesla:

• CEO Elon Musk's Controversial Role: Musk's influential but polarizing involvement with the Trump administration has adversely affected Tesla's reputation, making it harder for the company to maintain investor and consumer confidence.

  "The company struggled to overcome the reputational hit of CEO Elon Musk's polarizing role in the Trump administration," Dayton notes. (00:35)

• Intensified Overseas Competition: Tesla is facing increasing competition from international EV manufacturers, particularly in crucial markets like the U.S., China, and Germany, all of which saw double-digit percentage drops in Tesla's sales.

Meta's Advertising Revenue at Risk Due to Tariffs

The briefing also highlights significant challenges for Meta Platforms (formerly Facebook) amid rising tariffs imposed by the U.S. government. Analysts from Research Van Moffett Nathanson project that Meta could lose up to $7 billion in advertising revenue this year.

Impact on Advertising:

• Reduced Ad Spending from Chinese Companies: Major Chinese firms such as Temu and Shein are expected to cut back on their advertising budgets on Meta’s platforms in response to the increased costs of doing business in the U.S.

  "Chinese companies like Temu and Shein will pull back on ad spending on the platform as the cost of doing business in the US increases," Dayton reports. (01:15)

• Dependence on China for Growth: Despite not operating directly in China, Meta has become increasingly reliant on the Chinese market for advertising growth, which now poses a vulnerability due to the tariffs.

  "Meta has become increasingly reliant on China when it comes to the growth of its advertising business, even though it doesn't operate in the country," she explains. (01:25)

Meta has yet to publicly address the impact of these tariffs, and the company’s first quarter earnings are anticipated next week.

Verizon Passes on Tariff Costs to Consumers

Another major topic covered is Verizon's response to the ongoing tariff environment affecting smartphone imports.

Consumer Impact:

• Passing Costs to Customers: Verizon announced it will not absorb the increased import taxes on smartphones, resulting in higher prices for consumers.

  "Verizon said it won't be absorbing the cost of higher import taxes on smartphones, leaving consumers to pick up the tab on any price increases," Dayton states. (01:45)

Financial Performance:

• Earnings and Customer Losses: Despite the challenging tariff situation, Verizon reported an increase in first-quarter earnings and reaffirmed its full-year guidance. However, the company also noted a greater than expected loss in postpaid phone customers, indicating potential shifts in consumer behavior.

  "The company reported a rise in first quarter earnings and reaffirmed its full year guidance, but it said that doesn't reflect the effects of a quote, evolving tariff environment," she adds. (01:55)

Looking Ahead

Katie Dayton concludes the Tech Minute by directing listeners to the upcoming Wednesday episode of the Tech News Briefing for a more in-depth analysis of current tech industry developments.

"For a deeper dive into what's happening in tech, check out Wednesday's Tech News Briefing podcast," she invites. (02:00)

This episode provides a comprehensive overview of significant challenges facing major tech companies, highlighting how geopolitical factors and leadership dynamics are influencing their financial health and strategic decisions.