JPMorgan advised selling Tesla stock and offered an alternative for the portfolio

JPMorgan advised investors to sell Tesla shares and instead buy more favorable securities of auto parts suppliers. Tesla received two downgrades at once this week, and Wells Fargo predicted a 60% drop in the company's stock. Ilon Musk's plans to launch robot cabs in Texas in June won't help offset the weak performance of the auto business, according to some analysts. Others expect a significant move for the stock only if the project fails.

JPMorgan analyst Ryan Brinkman recommended locking in gains on Tesla shares and using those funds to move into the securities of several auto-parts makers such as Aptiv and BorgWarner, wrote Barron's. 

The publication notes that these players, like Tesla, will benefit from the trend toward electrification of transportation, while they show the worst dynamics and are valued cheaper than Ilon Musk's company. According to FactSet data cited by Barron's, BorgWarner is trading at about 8 times estimated earnings in 2025, Aptiv at 10 times, while Tesla is closer to 150.

Since the presidential election last November, shares of the largest U.S. auto parts makers have fallen by about 10% on average, Barron's calculated. Quotes of Tesla, on the contrary, rose by more than 20%, despite all the scandals associated with Musk. 

"Some underperformance of [parts] supplier stocks relative to the overall market this year is to be expected," Brinkman wrote in a note on Monday, June 9.  "The global supply chain in the auto industry is tightly intertwined and the industry itself is highly pro-cyclical, so it is more exposed to duties and potential macroeconomic shocks than the broader economy. However, he said, the decline has gone too far, which creates an investment opportunity;

Shares of Aptiv added 0.5% in trading on Wednesday, June 11, after rising 4.7% the previous day. They are advised to buy by about 70% of Wall Street analysts, Barron's points out. The average target price is around $76 and implies a rise of 8%. 

BorgWarner stock is also in slight plus, having jumped by 3.9% on Tuesday, June 10. This company has a "buy" rating from 63% of analysts, with a consensus target of $38 - 12% above the current price.

Wells Fargo expects Tesla shares could fall as much as 63% from the last close, reports SNBC. The investment bank on Monday reiterated a $120 target price (it's among the most pessimistic on Wall Street) and an Underweight rating -essentially a recommendation to sell the securities. 

"The fundamentals of Tesla's core automotive business continue to weaken," analyst Colin Langan wrote in a note to clients. - Global deliveries in May were down 23% year-over-year. While the "price tags" on the website seem stable over the past 12 months, aggressive financing (buyer credit - Oninvest) offers actually continue to operate as hidden discounts. There remains a risk to margins in the second quarter due to lower operating leverage."

Potential drivers, such as the expected June launch of an unmanned cab service in Texas, are no longer enough to offset weak auto sales, including because the debut will be with a limited number of robotaxis, according to a Wells Fargo analyst. 

At the same time, Tesla received two downgrades -from Argus Research and Baird. Both teams of analysts dropped their buy recommendation on the automaker's stock on June 9 and advised a hold (Hold rating). Invesbanks, in particular, were concerned about the public spat between Ilon Musk and Donald Trump: it could lead to a further weakening of demand for Tesla, the analysts believe. Baird also questioned the prospects for robotaxis: Musk's comments on self-driving cars are "a bit overly optimistic," and the market has already factored the excitement around them into the share price, the bank analyst believes.

Even despite lowered expectations, the success of the robotaxi project remains key to holding Tesla's current high stock valuation, Bloomberg notes but doesn't expect a significant move in the stock price. "It would take a complete fiasco for a launch to be a game changer. Anything short of a failure could be portrayed as a step in the right direction," Interactive Brokers chief strategist Steve Sosnick told the agency.

A total of 53% of analysts tracking Musk's shares advise to buy them, Barron's points out. At that, the average target price is lower than the current quotations;

On the evening of June 10, Musk first announced the robotaxi's launch date - tentatively scheduled for June 22.  "We're too paranoid about security, so the date could shift," he wrote in the comments of his post about arriving in Austin. According to Musk, the first unmanned route from a Tesla factory to a customer's home will take place on June 28.

The announcement of the date came amid an easing of the conflict between the entrepreneur and President Trump, which escalated last week over a budget bill that could strip Tesla of some of its profits. On Wednesday, June 11, Musk wrote that he regretted some of his postings against Trump and acknowledged that he had "gone too far."

Tesla shares lost 17% over the two days of the acute phase of the spat, but by Tuesday's close had recovered about 70% of the losses, reported Barrons. On Wednesday, the company's quotes jumped more than 2%. According to strategists quoted by Bloomberg, tensions between Musk and Trump have made it difficult to gauge how much of the volatility the market is expecting specifically from the robotaxi launch and how much is due to general nervousness about the fraying relationship between the recent allies. According to strategists quoted by Bloomberg, the tension between Musk and Trump has made it difficult to assess how much of the market's volatility is due to the robotaxi launch and how much is due to general nervousness about the fraying relationship between the recent allies.