Tesla Stock Downgraded by Two Institutions Amid Musk-Trump Dispute, Stock Falls 27%

Tesla Inc. faced a double downgrade from two institutions on Monday, highlighting growing concerns on Wall Street about the electric vehicle manufacturer's prospects. This comes after a public dispute between Tesla's CEO Elon Musk and Donald Trump last week.

Argus Research and Baird both downgraded Tesla's stock to a level equivalent to "hold," further cementing Tesla's image as the least favored large-cap stock among analysts. This downgrade is the latest challenge for Tesla, which has seen its stock price fall approximately 27% so far this year, making it the worst-performing stock among the seven tech giants in the U.S. market. Tesla's stock price had risen after Trump's return to the White House, as Musk had previously been a strong supporter of Trump. However, it has since fallen nearly 40% from its peak in December last year.

Much of the recent decline in Tesla's stock price can be attributed to the public dispute between Musk and Trump. Although Musk later expressed a willingness to ease tensions, the strained relationship between the two remains a significant unfavorable factor hanging over the stock price.

Argus Research analysts wrote, "Looking ahead, we are concerned that the verbal sparring between Trump and Musk, along with the expiration of electric vehicle tax credits, could further weaken demand for new Teslas." They downgraded the stock from "buy" to "hold." They added that the dispute underscores the stock's current "trading based on non-fundamental events" characteristic. Baird also expressed similar views and downgraded the stock from "outperform" to "neutral."