Robotaxi bubble warning + "political baggage" drags down Tesla, Inc. (TSLA.US) downgraded by two major Wall Street institutions.

Recently, Tesla, Inc. (TSLA.US) was downgraded to "neutral" by two Wall Street institutions, highlighting the short-term uncertainties facing the company and the market's "overly high expectations" for its upcoming launch of autonomous driving robotaxis. Baird and Argus analysts withdrew their bullish ratings on Tesla, Inc., citing market instability and reputation risks brought about by recent public disputes between Musk and President Trump. Baird's Ben Kallo said in a research report to clients on Monday, "The recent conflict between Musk and President Trump has highlighted the key person risk that this CEO's political activism brings." He added that this situation adds to the "uncertainty surrounding Tesla, Inc.'s outlook" and raises concerns about brand damage, which could persist "until there is clear evidence of sustained sales growth." Argus analyst Bill Selesky believes recent developments indicate that Tesla, Inc.'s stock price is being driven by "non-fundamental events," and the expiration of electric vehicle tax credits "may further weaken demand for Tesla, Inc.'s new cars." While Kallo still sees Tesla, Inc. as a "core long-term holding," he noted that there are too many short-term uncertainties, including market's "overly high expectations" for the Robotaxi and the increasingly competitive environment. Kallo said that the difficulty in advancing the Robotaxi business "will likely exceed expectations, and its profitability is likely to be lower than some investors' overly optimistic estimates." Furthermore, Kallo lowered his delivery estimates for the second quarter of 2026 from 404,800 units to 377,000 units to reflect the impact of the cancellation of electric vehicle tax credits.