Tesla gets two downgrades in a day: Wall Street's doubts about its stock are growing

Immediately two analysts dropped their recommendation to buy Tesla shares on Monday, June 9. This solidifies Tesla's reputation as the «most disliked» by analysts among technology giants, and also reflects Wall Street's doubts about the company's future, according to Bloomberg. In particular, analysts are worried about Ilon Musk's spat with Donald Trump: it could lead to a further weakening of demand for Tesla, Argus warned.

Analysts at Argus Research downgraded Tesla shares from Buy to Hold, shows MarketScreener. Baird analyst Ben Kallo similarly downgraded the stock from Outperform («above market,» also meaning a buy advice) to Neutral. That's the first time Callo's Tesla rating has been at that level in at least three years, noted Barron's. At the same time, the analyst left the same target price for Tesla shares at $320 - that's about 8% higher than the current one.

«Looking ahead, we are concerned that the war of words between President [Donald] Trump and [Tesla CEO] Ilon Musk, as well as the expiration of electric vehicle tax credits, could weaken demand for new Teslas more,» Argus analysts said in a note that was quoted by Bloomberg.

The conflict between Musk and Trump, which openly erupted last week, shows the fact that Tesla shares are «currently trading on non-fundamental events,» according to Argus. Musk and Trump's spat reflects the «key persona risk» associated with the Tesla CEO's political activism, agreed Baird analyst Ben Kallo.

«While we have no indication of how [Trump and Musk's] relationship might change or what each will do, we believe the situation adds uncertainty to Tesla's prospects. In addition, we believe it could intensify questions about brand damage, which we expect will persist until there is sustained evidence of [delivery] volume growth,» Kallo wrote in a Bloomberg statement.

Argus expressed concerns that demand for electric cars in the U.S. is growing slower than expected and that U.S. auto giants Ford and General Motors are getting better at making electric vehicles, MarketWatch writes.

Baird also expressed doubts about the prospects for Tesla's robot cabs, which the company wanted to launch in Texas in June. Musk's comments about self-driving cars are «a little overly optimistic» and the market has already factored the hype around them into the stock price, Callo believes. Musk has promised that hundreds of thousands of robotaxis will be on the road by the end of 2026, but Baird predicts only 6,000, reports MarketWatch. While having a presence in this area is more important than the number of unmanned cars on the road, Tesla is entering a more complex and likely less profitable business than is built into Tesla's stock price, the publication writes.

In addition, Baird is also concerned about the elimination of incentives for the purchase of electric cars, which is envisioned in Trump's budget bill, which became the reason for his conflict with Musk. The analyst also pointed to increased competition in the electric car market and the high cost of the company, Barron's reports.

«We view Tesla as a key asset for the long term, but are stepping aside at this time,» Kallo wrote in Barron's outline.

Goldman Sachs on June 5 lowered its target price on Tesla shares by $10 to $285, which is roughly in line with the securities' current value. The bank also reaffirmed its neutral rating on the securities. The main reason for lowering the target price was falling global sales of the company.

Tesla's downgrade from Baird and Argus solidifies the company's reputation as the least favorite megacap stock among analysts, Bloomberg writes. Less than half of all analysts tracking Tesla's securities advise them to buy, Bloomberg data show: they have 30 Buy ratings versus 18 Hold and 13 sell tips. The company by a wide margin has the lowest share of buy recommendations among the largest companies on the market, the agency writes. The average target price is about the same as the current one: this means that analysts do not expect any growth in the stock in the long term, Bloomberg added.

Tesla shares have fallen by about 26% since the beginning of the year - this is the worst result in the «Magnificent Seven» of technology giants. At the trades on June 9, the securities rose in price by almost 2% in the moment.