A Tesla stock downgrade early Monday tempered investor excitement for this week's expected robotaxi service launch as the public spat between CEO Elon Musk and President Donald Trump triggered a major sell-off.
Baird analysts on Monday downgraded TSLA to a neutral rating, from outperform, with an unchanged 320 price target. That represents about 8% upside from current trading levels. The analysts wrote that Tesla stock has performed well since Q1 earnings, advancing more than 20%, primarily due to anticipation for the launch of the limited robotaxi service.
However, the firm said Musk's robotaxi ramp up rate predictions "are a bit too optimistic" and that this excitement has been priced into Tesla stock. The analysts also wrote that Musk's ties to Trump "have added considerable uncertainty." Baird continues to see Tesla as a core holding in the long term, but is stepping to the sidelines for now, according to the research note.
Investors expect Tesla will launch its robotaxi service in Austin, Texas, on Thursday, based on a report from Bloomberg. As of Monday, Tesla had not announced an official date.
Tesla was listed as a "known" autonomous vehicle, or AV, operator in Austin as of June 9, according to the Austin Department of Motor Vehicles website. The EV giant is listed as being in the "testing" phase of autonomous driving operation in the city. For comparison, Waymo is officially listed in the "deployment" phase.
Meanwhile, through the first five months of 2025, Tesla vehicle sales in China's domestic market have fallen nearly 8% compared with the same period in 2024, according to data released Monday by the China Passenger Car Association (CPCA). In May, Tesla sold 38,588 vehicles in China, a 30% decrease from the 55,215 units sold in the same month last year. China vehicle sales were arguably the one bright spot for Tesla's EV business in Q1.
Trump: Tesla Stock Moves Higher Late
TSLA pared early losses, advancing 4.6% to 308.58, closing just above the 200-day line, during Monday's stock market action after sinking below multiple key levels last week.
Tesla Bounces After Musk-Trump Blowup, But Maybe There's More To Thursday's Decline
Trump late on Monday struck a diplomatic tone discussing Musk with members of the media.
"We had a good relationship and I just wish him well, very well actually," Trump said.
The president added that he "may move" his Tesla vehicle "around a little bit," apparently signaling he will not be selling it. "I have a lot of locations," he added.
Trump also said that he thinks Starlink is a "good service."
Musk And Trump Hit Tesla
Tesla stock dived 14.7% to 295.58 last week, plunging Thursday to round-trip an aggressive entry and undercut key moving averages — including its 21-day exponential moving average, the 200-day moving average and 50-day line — as Musk and Trump traded insults and threats online.
Shares rose Friday but hit resistance around the 200-day line.
TSLA stock's plunge last week tracked news of the Musk-Trump feud, with Friday's bounce possibly reflecting hopes for lowered tensions. Musk deleted tweets Friday night suggesting Trump appeared in the unreleased FBI files on financier and convicted sex offender Jeffrey Epstein.
However, Trump has continued to say Musk-related government contracts are at stake. On Saturday, Trump told NBC News that Musk faces "serious consequences" if he contributes to Democratic candidates.
On Sunday, Musk posted that "we have the spaceships and they do not" — clearly highlighting SpaceX's lead and, perhaps, a more-veiled threat to Trump.
Before Thursday's blowup, Musk repeatedly criticized Trump's tax bill, a version of which has been approved and was released by the House. The Senate is now working on its take on the bill.
The President told reporters early Thursday that Musk was angry that the House bill opted to eliminate Biden-era EV credits. In addition, the Trump administration had also moved away from a Musk-backed head for NASA.
The online skirmish ratcheted up, with Musk posting to X, Trump responding on Truth Social. Trump finally threatened to terminate Musk's government contracts. Musk retorted with a post claiming that Trump was in the "Epstein files."
"While the situation remains fluid, we believe the disagreement will not help Tesla demand but could potentially (temporarily) alienate multiple sides of the political spectrum," Morgan Stanley analyst Adam Jonas wrote on Friday.
The Robotaxi Release And Tesla Stock
Tesla stock's decline last week could also be read as a warning that the upcoming Tesla robotaxi launch is a risk event that could trigger huge moves.
CFRA analyst Garrett Nelson wrote Thursday that the "stock's sell-off reflects a number of other factors: an unjustified run-up following its Q1 earnings release, ongoing market share losses in China and Europe, and a realization that next week's Robotaxi launch in Austin could disappoint."
"Similar to other major Tesla events in the past, shares have appreciated sharply leading up to the event, raising the probability of a 'sell the news' reaction. We remain at Hold, expecting more volatility in the near term. Buckle up!" Nelson added.
Musk, recently speaking with CNBC, said there will be about 10 robotaxi Model Ys in the first week and that there could be 1,000 units in a "few months." At the time, Musk did not give a specific date for the rollout, but said it would come before end of June.
Musk confirmed the autonomous trips will have human supervision and that the service will be geofenced, meaning portions of Austin will be unavailable.
Cathie Wood's ARK Invest has also repeatedly trimmed Tesla holdings in recent days. Wood sold Tesla last Monday, after making similar moves three times the prior week, selling a combined nearly 50,000 shares.
Market In A Power Trend
TSLA stock is now down about 24% for the year, despite surging on robotaxi bets following the April 22 Q1 conference call. The stock is also down 37% from its all-time high of 488.54.
Tesla stock has a 21-day average true range of 5.41%. The ATR metric, available on IBD's MarketSurge charting tool, gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily stock market action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
The S&P 500 and Nasdaq are now in a power trend. Investors can buy stocks with ATRs of up to 8%, though they should be wary of being too concentrated in high-octane names. Tesla stock needs to recover the 200-day and 21-day line, according to MarketSurge charts.
Tesla stock has a 67 Composite Rating out of a best-possible 99. The stock also has an 87 Relative Strength Rating and a 59 EPS Rating.
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