Tesla stock reverses higher as robotaxi test poised to start this week

Tesla (TSLA) stock rebounded, closing up 4.5% after initially falling as much as 4% due to ongoing concerns stemming from CEO Elon Musk's public dispute with President Trump, which led to two analyst downgrades from Argus and Baird citing political risk and key-person risk, respectively; Argus downgraded to Hold from Buy, while Baird downgraded to Neutral from Outperform. Analysts see Tesla's upcoming robotaxi test, set to begin June 12 in Austin, Texas, as a potential long-term catalyst, though remote teleoperation for safety may hinder rapid scaling.

Analysis

Tesla (TSLA) stock demonstrated notable volatility, closing up 4.5% after an initial premarket decline of up to 4%. This followed a challenging previous week where the stock fell nearly 15%, wiping out over $150 billion in market capitalization due to concerns arising from a public dispute between CEO Elon Musk and President Trump. This situation prompted two analyst downgrades: Argus shifted its rating to Hold from Buy, with analyst Bill Selesky expressing concern that the conflict and the expiration of EV credits could dampen demand for new Teslas, although the firm still views Tesla as attractive long-term. Baird's Ben Kallo also downgraded TSLA to Neutral from Outperform, citing the "key-person risk associated with Musk's political activities" and the resultant "uncertainty to TSLA's outlook." Despite these downgrades and the prevailing political overhang, analysts widely anticipate Tesla's upcoming unsupervised robotaxi test, set to begin on June 12 in Austin with an initial fleet of 10 to 20 vehicles, as a significant long-term catalyst. The implementation of remote teleoperators for safety during these tests, while a crucial initiative, is noted as a factor that might impede the rapid scaling of the robotaxi fleet. Wedbush's Dan Ives remains bullish, emphasizing the importance of this robotaxi test for Tesla's future gains.

Key Decisions for Investors

• Investors should closely monitor the developments and results of Tesla's robotaxi test commencing June 12, as this is identified by analysts as a crucial long-term catalyst despite current political uncertainties and CEO-related risks.
• The recent downgrades by Argus and Baird, specifically citing political risk, key-person risk tied to Elon Musk, and potential demand impacts from the CEO's dispute with President Trump and expiring EV credits, warrant careful consideration for near-term stock performance.
• Evaluate the increased uncertainty and key-person risk highlighted by analysts against the potential long-term value creation from technological advancements such as the robotaxi initiative, while being cognizant of the stock's recent significant volatility.