Tesla stock lower despite robotaxi test poised to start this week

Tesla (TSLA) stock rebounded 4.5% after initially falling 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. Despite the near-term headwinds, analysts view Tesla's upcoming robotaxi test, set to begin June 12 in Austin, Texas, as a potential long-term catalyst, although the use of remote teleoperators may hinder the speed of fleet expansion.

Analysis

Tesla (TSLA) stock exhibited significant volatility, closing up 4.5% after initial premarket weakness, following a tumultuous prior week where it dropped nearly 15%, erasing over $150 billion in market capitalization. This decline was primarily attributed to the public dispute between CEO Elon Musk and President Trump, which has raised investor concerns about political risk associated with the company. These concerns were underscored by President Trump's statement of having "no intention" of speaking with Musk in the near future. Consequently, Tesla received two analyst downgrades: Argus moved its rating to Hold from Buy, with analyst Bill Selesky expressing concern that the "war of words" and the expiration of EV credits could weaken demand for new Teslas, though maintaining a positive long-term view. Baird's Ben Kallo also downgraded the stock to Neutral from Outperform, citing the incident as an example of "key-person risk" associated with Musk's political activities, which adds "uncertainty to TSLA's outlook." Despite these near-term headwinds, analysts widely view Tesla's upcoming unsupervised robotaxi test, scheduled to begin on June 12 in Austin with 10 to 20 vehicles, as a significant long-term catalyst. The system will utilize remote teleoperators for interventions, a safety measure that might, however, constrain the pace of fleet expansion. Wedbush's Dan Ives emphasized the importance of this robotaxi test for Tesla's future gains.

Key Decisions for Investors

• Investors should brace for continued stock volatility driven by the identified key-person risk linked to CEO Elon Musk's public and political engagements, which has already prompted analyst downgrades.
• The upcoming robotaxi test commencing June 12 is a critical milestone; its initial performance and scalability, particularly considering the reliance on remote teleoperators, should be closely monitored as a primary long-term valuation catalyst.
• Consider the current tension between significant long-term technological potential, particularly in autonomy, against immediate-term risks stemming from political uncertainties and the potential impact of expiring EV credits on vehicle demand, as highlighted by analysts.