Tesla was downgraded by both Argus Research and Baird on Monday, reflecting growing Wall Street unease over the company’s outlook following a public fallout between CEO Elon Musk and President Donald Trump. The downgrades, which lowered Tesla’s stock to hold-equivalent ratings, come as shares have declined roughly 27% in 2025, making Tesla the poorest performer among the so-called “Magnificent Seven” tech stocks.
The latest analyst moves signal broader concerns that non-operational events are now driving investor sentiment around Tesla. The clash between Musk and President Trump has become a focal point for investors worried about political entanglements and reputational risk. Both firms cited the feud as a major distraction and a possible deterrent for future Tesla demand.
Adding to the pressure is the recent expiration of key electric vehicle tax credits, which analysts believe could further dampen new vehicle sales in the near term. While Tesla had previously seen gains following President Trump’s reelection, shares are now down nearly 40% from their December highs.
Baird analysts expressed concern that Musk’s political involvement elevates “key-person risk,” introducing uncertainty into the brand’s image and operational focus. They also questioned the sustainability of investor enthusiasm around Tesla’s robotaxi initiative, which is set to launch in Austin this week. The firm noted that optimism around autonomous vehicle technology may already be fully priced into Tesla’s stock.
Despite the downgrades, Tesla still holds 30 buy ratings, along with 18 holds and 13 sell ratings among analysts tracked by Bloomberg. However, less than half recommend buying the stock—an unusually low proportion for a megacap company. Tesla currently trades near the average price target set by analysts, suggesting limited expectations for a near-term rebound.
Tesla’s recent challenges underscore the fragile balance between product innovation, political perception, and market confidence. As the company navigates its next phase, including the high-profile robotaxi rollout, analysts and investors alike remain cautious.
