Put down the joint, Elon.
Nomura Instinet downgraded Tesla Inc. (TSLA) to neutral on Tuesday, Sept. 11, and analysts slashed the price target to $300 from $400. Tesla is "no longer investable" in their eyes, Nomura said.
Tesla was at $276 in morning trading, down nearly 3%.
Nomura began the note by saying it has "been one of the most bullish on Tesla shares since initiating coverage last October" but have one big problem with the electric carmaker.
"The issue though is the erratic behavior of CEO Elon Musk. During the second quarter, the switch seemingly flipped. This is best expressed in the number of tweets per day, which increased to 15 per day since May from four per day during the prior 18 months."
Nomura cited Musk's recent behavior "taunting short sellers, New York Times Interview, cave diver accusation, earnings call outburst, Joe Rogan podcast."
Another issue that analysts have was the departures of executives over the past couple of months. "In particular, the resignation of Accounting Officer David Morton after only one month on the job hit close to home. Given our background in technology, we recognize Morton as a well-respected executive..."
The analysts still have high hopes for Tesla itself, however. "We continue to believe that Tesla could be a lot bigger than it is today," the analysts wrote. The note even compared Tesla to Apple Inc. (AAPL) when it comes to brand recognition.
"With the launch of the Model 3, we saw that consumers were wiling to forego compelling alternatives despite extended wait times and a premium price point," the note said. The problem with the brand recognition is that Musk's behavior is "tainting the Tesla brand, which in terms of value, is most important."
Analysts said that "customers are fickle and we suspect [they] could become scared about buying a Tesla if they believe that the company might not be around long term."
Nomura offerws one last point on Tesla. "Notwithstanding improving fundamentals, we believe that Tesla is in need of better leadership (an about face) and are moving to the sidelines until we see what happens with management," the analysts said.
Over the past year, Tesla has fallen around 21%.
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