(July 23): This year has been a testament to Elon Musk’s ability to lead Tesla Inc’s shares into and out of trouble.

It’s been a volatile time even by Tesla standards, with the chief executive officer battling for more control of the company, turning back from a US$25,000 (RM116,888) electric vehicle and ordering mass layoffs. These erratic episodes helped send the stock on a 43% plunge as of April 23, the day Tesla last reported earnings.

The shares have been on a tear since then, despite an uninspiring set of results and the downward trend in expectations for the second-quarter figures Tesla will report Tuesday. The main rouser of a rally that added more than US$386 billion to Tesla’s market capitalization in just 11 weeks was none other than Musk.

The CEO managed to get investors to pay more mind to Tesla’s potential in a future dominated by artificial intelligence than its sluggish sales and earnings at present. His astute sense of what the market wants to hear and incessant salesmanship will be put to the test after the close, when the company is likely to post lower revenue for the second quarter in a row and a fourth-straight drop in profit.

“The real game-changer for Tesla’s valuation lies in Musk’s ability to convincingly position the company as a leader in AI and autonomous technology,” said Adam Sarhan, founder and chief executive officer at 50 Park Investments. “This narrative shift is critical for justifying Tesla’s premium valuation compared to traditional automakers.”

Tesla’s unpredictable shares have long been at the whims of the CEO’s charisma and controversy, and investors appear to be bracing for more of the same heading into another set of earnings.

Options trading implies the stock could be headed for an 8% move in either direction off the second-quarter results, with Musk likely to further address Bloomberg’s July 11 report that the company had postponed an unveiling of robotaxi prototypes that had been slated for August.

While Musk has confirmed that he asked for “an important design change” to the front of the vehicles, he didn’t elaborate on the alteration or say how much extra time the company needed to get the cars ready.

“Tesla’s 2Q print will likely be a tough call for investors given all the moving parts,” said Tom Narayan, an equities analyst at RBC Capital Markets who rates the shares the equivalent of a buy. “Some of this move is probably related to the upcoming robotaxi event. We expect it could help change the narrative on the stock and are big believers in the thesis, but wonder how much is already priced in.”

Musk touched off the rebound in Tesla’s stock by announcing alongside first-quarter results that the company would accelerate the introduction of new models — including more affordable vehicles — to as soon as late this year. Previously, the company had said it expected to start making next-generation EVs in the second half of 2025.

The CEO was tight-lipped about details of those vehicles and also drew a line in the sand, telling investors they shouldn’t bet on Tesla’s stock unless they believe the company is going to “solve” autonomous-driving technology.

The lofty multiples that Tesla shares trade at — they change hands for about 94 times forward earnings — suggest there are plenty of believers that Musk will eventually make good on his self-driving car predictions. General Motors Co and Ford Motor Co, by contrast, trade at mid-single-digit multiples.

That said, Musk’s aggressive effort to tether Tesla’s fortunes to autonomy has had its drawbacks. When Bloomberg reported this month that the company’s robotaxi unveiling would be delayed to October, the stock fell 8.4%, its biggest one-day drop since January.

“The selloff that we saw when Musk delayed the event tells me that a lot of the recent rally has been AI-related,” said Seth Goldstein, equities strategist at Morningstar.

Analysts’ average estimate for Tesla’s second-quarter earnings is roughly half what it was a year ago, though projections did inch higher in the past month, likely as a result of better-than-anticipated vehicle sales reported on July 2. The company is now expected to report a profit of 58 cents a share and revenue of US$24.1 billion, according to data compiled by Bloomberg.

While many analysts point to Tesla’s AI potential as the biggest support for the stock, investors still want Musk to revive growth at the EV business while engineers work on self-driving technology. Tuesday’s results will shed light on how the company is executing on these near and long-term objectives.

“Tesla has significant attributes to be valued as an AI beneficiary, but the company must see a stabilisation in the negative earnings revisions within the auto business first,” said Morgan Stanley’s Adam Jonas, who has the equivalent of a buy rating on the stock.