Tesla’s (NASDAQ: TSLA) stock has been downgraded by Baird analyst Ben Kallo just days before the company’s anticipated robotaxi service launch in Austin on June 12.
In an investor note on June 9, Kallo lowered Tesla’s rating from ‘Outperform’ to ‘Neutral’ and set a price target of $320, an 8% upside from Friday’s closing price of $295.
Following the downgrade, TSLA shares dropped nearly 3% in pre-market trading on Monday, falling to $286.
Robotaxi aggressive timeline concern
Baird’s caution centers on concerns about Tesla’s robotaxi rollout. While CEO Elon Musk has called the service a potential trillion-dollar disruptor, Kallo expressed skepticism about the aggressive timeline.
The initial pilot will launch with just ten driverless Model Ys, a modest start compared to competitors like Waymo.
Despite the downgrade, Baird still considers Tesla a core long-term holding.
Musk’s recent fallout with President Donald Trump adds to the uncertainty. Their dispute over a GOP tax bill that removes EV tax credits contributed to a 14% drop in Tesla’s stock, wiping out $150 billion in market value in a day.
“We believe Musk’s comments regarding the robotaxi ramp rate are a bit too optimistic, and we believe this excitement has been priced into shares. We also note that Musk’s ties to President Trump have added considerable uncertainty,” Kallo said.
Trump’s threats to cut government contracts, particularly those involving SpaceX, have further spooked investors, fueling concerns about a more challenging regulatory environment for Tesla’s autonomous ambitions.
At the same time, Musk’s recent departure from his advisory role in Trump’s circle has allowed him to refocus on Tesla. Investors hope his renewed attention will help tackle ongoing issues like declining EV sales and growing competition from Chinese automakers.
Tesla’s valuable cards
Despite the Baird downgrade, other Wall Street analysts remain bullish. For example, Morgan Stanley’s Adam Jonas emphasized Tesla’s potential beyond EVs, pointing to its work in autonomous driving, AI, and robotics.
Jonas projected that the urban air mobility market could grow from $1 trillion in 2040 to $9 trillion by 2050, estimating Tesla’s tech and manufacturing advantage could eventually add $100 to $1,000 per share in value.
“While emotions are running high, we are not convinced the longer-term vectors that drive the stock’s value have changed here. <…> AI leadership, autonomy/robotics, manufacturing, supply chain re-architecture, renewable power, critical infrastructure. Tesla still holds so many valuable cards that are largely apolitical, in our opinion,” he said.
However, he has warned investors to expect a rough path ahead before the company recovers from battles with declining sales and increasing competition.
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