You’ve got to know when to hold ’em and, Tesla owners, now might be the time.
It’s been quite a week for Elon Musk.
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The CEO of electric-vehicle producer Tesla (TSLA) and the former head of the Department of Government Efficiency went through a social media meltdown with ex-buddy Donald Trump over the president’s “One Big Beautiful Bill,” which the SpaceX owner says will drive up the federal budget.
Musk, who poured nearly $300 million into Trump’s 2024 campaign, claimed that the Department of Justice hasn’t released its files into its investigation of Jeffrey Epstein, accused of sex-trafficking minors in 2019, because the president is in them.
He followed up another post, saying he would apologize to Trump “as soon as there is a full dump of the Epstein files.”
Both posts were later deleted.
Trump, who said the world’s richest man was “disrespectful to the office of the President,” floated the idea of terminating Musk’s substantial government contracts and subsidies.
Tesla CEO has been engaged in a war of words with President Donald Trump.
Image source: Apu Gomes/Getty Images
Tesla CEO facing several challenges
He also warned there would be “serious consequences” if Musk funded Democratic candidates to run against Republicans who vote for the GOP’s sweeping budget bill.
“If he does, he’ll have to pay the consequences for that,” Trump told NBC News in a phone interview, but he declined to specify what those consequences would be.
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He also said he has no desire to repair his relationship with Musk.
And Trump called the Epstein allegation “old news,” adding that “even Epstein’s lawyer said I had nothing to do with it.”
Meantime, Tesla sales have been falling in key markets, such as Europe and California.
China’s BYD (BYDDY) beat Tesla in European EV sales in April despite incurring a higher tax rate. And the Chinese EV maker outsold Tesla in the UK last month.
On June 6, Milan Kovac revealed he would step down from his position as vice president of engineering at Tesla’s Optimus program, the division that develops robotic humanoid technology.
This is all going on while Musk’s robotaxi service is scheduled to launch in Austin on June 12.
Tesla shares are down 27% this year but have climbed 67.1% since 2024.
Analyst cites Musk ‘war of words’ with Trump
Some investment firms adjusted their ratings of Tesla shares amid the ongoing controversies, including Argus. which downgraded Tesla to hold from buy with no price target, according to The Fly.
The stock “appears to be currently trading on nonfundamental events,” the investment firm said, expressing concern that the “war of words” between Trump and Musk, along with the expiration of tax credits for purchases of electric vehicles, could further weaken demand for new Teslas.
While the firm said that AI-related projects such as the Cybercab and Optimus are positive for the company and its valuation, it believes a near-term hold rating is “prudent at this time.”
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Meanwhile Baird downgraded Tesla to neutral from outperform with an unchanged price target of $320.
The stock’s strong performance following a “fundamentally poor quarter” has been partly a product of anticipation for the June launch of both a more affordable vehicle and Robotaxi service, the analyst tells investors in a research note.
The firm said that Musk’s comments regarding the Robotaxi ramp rate “are a bit too optimistic,” and that this excitement has been priced into the shares.
Baird also noted that Musk’s ties to Trump “have added considerable uncertainty.” The firm said that it sees Tesla as a core holding in the long term, but is stepping to the sidelines for now.
Morgan Stanley analyst Adam Jonas said that while the disagreement between Musk and Trump will help Tesla demand and could potentially “alienate multiple sides of the political spectrum,” the company “still holds so many valuable cards that are largely apolitical.”
The longer-term vectors that drive the stock’s value have not changed much, including Tesla’s artificial intelligence leadership, robotics, manufacturing, supply chain rearchitecture, renewable power, and critical infrastructure, the analyst said.
Further, Jonas said, he does not believe the phasing out of electric vehicle tax credits in the Big Beautiful Bill is material to the long term outlook for Tesla.
The analyst reiterated an overweight rating on the shares with a $410 price target.
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