After an eye-watering recovery rally that saw it gain close to 70% in just a few weeks, Tesla Inc (NASDAQ: TSLA) is once again making its investors nervous. With CEO Elon Musk indicating towards the end of May that he was stepping back from White House duties to focus on the company, you'd be forgiven for thinking one of the major headwinds had been removed.
And maybe it had. But the stock then sank 25% into the first week of June, and while it's bounced back somewhat since then, it remains under pressure.
In the midst of all this volatility, a rare and potentially worrying warning sign has also just flashed. Over the past week or so, the teams at Baird and Argus both downgraded the stock to Neutral, while the team at Guggenheim rated Tesla a firm Sell, reiterating their past bearish stance and going against what has very much been a wider trend of bullish updates in recent weeks.
The Bear Case Gains Momentum
At first glance, the downgrades paint a concerning picture for near-term performance. Baird's Ben Kallo, who shifted his rating from Outperform to Neutral, highlighted how recent events between Musk and President Trump exemplify the "key-man" risk associated with Musk's political activities.
This situation adds uncertainty to Tesla's outlook and raises legitimate concerns about potential brand damage. Kallo also trimmed his 2026 delivery estimate to well below the consensus - a further indication of what he sees as an impending slowdown to Tesla's sales.
Argus analyst Bill Selesky echoed similar concerns, arguing that recent developments underscore how Tesla trades on "non-fundamental events." The expiration of EV credits could further weaken demand for new Teslas, creating additional headwinds for a company already facing intense competition in the electric vehicle space.
Perhaps most damning was Guggenheim's Ron Jewsikow, who maintained his Sell rating with a $175 price target, implying a massive 45% downside from current levels. Jewsikow warned that Tesla's fundamentals "continue to deteriorate at an alarming rate," with shares being driven largely by Robotaxi hype and political narratives rather than actual business performance.
Here's Where It Gets Interesting
The thing is, though, despite this chorus of downgrades, believers in Tesla's long-term potential should actually be excited about what's happening. While the bears grab headlines, some of Wall Street's most respected firms are doubling down on their bullish stance. Piper Sandler, for example, actually reiterated their Overweight rating last week, maintaining their $400 price target. That's pointing to a projected upside of more than 25% from current levels.
Even more bullish is Wedbush, which announced a $500 price target in the first week of June. The divergence between the bears and bulls has rarely been this pronounced, creating a fascinating setup for contrarian investors and those who believe in the company's long-term potential.
And while this may cause some bulls to wince, given his meme-worthy reputation for being wrong, CNBC's Jim Cramer pushed back hard against the downgrades. He made the interesting point that if you remove the word "Sell" from Guggenheim's research note, their thesis suddenly becomes more of a bullish stance on Tesla.
Cramer expressed particular enthusiasm for Tesla's Robotaxi initiative, citing sightings of driverless vehicles in Austin as evidence of real progress and reasons to be bullish.
The Setup for Believers
This divergence in analyst opinions creates precisely the kind of opportunity long-term investors should be looking for. When Wall Street can't agree on a stock's direction, volatility increases and weak hands tend to exit. For those with conviction in Tesla's technological leadership and market position, not to mention Musk's visionary reputation, these downgrades could provide the pullback needed for a better entry point.
While bears focus on near-term delivery misses and tightening margins, Tesla bulls see a company on the verge of revolutionizing the automotive industry and transportation. The Robotaxi launch is a wildcard that could shift sentiment dramatically, but with Musk refocusing on the company and major catalysts ahead, the current uncertainty might just be the darkness before the dawn.
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