One of the biggest bulls on Tesla among analysts covering the stock is no
longer recommending it as a ‘buy’, as he believes
that Elon Musk’s erratic behavior in recent months is damaging the brand.
In a note to clients on Tuesday titled “No Longer Investable”, Nomura
Instinet analyst Romit Shah said that while Nomura has been one of the most
bullish on Tesla’s stock since it initiated coverage last October, the
controversial behavior of Tesla’s chief executive is recent months has hurt
the company and likely contributed to the senior management exodus.
Nomura cut its rating on Tesla to ‘neutral’ from ‘buy’, and has slashes
Tesla’s price target to $300 from $400. The previous $400 target was the
sixth-highest on Wall Street among 22 analysts, according to FactSet data.
“The issue though is the erratic behavior of CEO Elon Musk. During the
second quarter, the switch seemingly flipped … We are worried that this
behavior is tainting the Tesla brand, which in terms of value is most important,”
Shah says in the note, as carried by CNBC.
The analyst cited Musk’s increased Twitter activity, the snubbing of
analysts on a conference call when Musk called their questions “boring”, the NYT
interview where Musk fell apart multiple times, and last week’s live video interview,
during which Musk smoked marijuana.
Before that, Musk pronounced in early August that he would take
Tesla private, but backtracked
on that proposal two weeks later.
After last week’s live interview, Tesla’s stock tumbled on Friday, also
due to the resignation of
Chief Accounting Officer Dave Morton, who is quitting after just one month on
the job. Related:
The Death Of Retail In NYC
On Monday, however, Tesla’s stock bounced back after two positive analyst
reports.
Baird analyst Ben Kallo confirmed
his buy rating on Tesla, saying that the stock is still worth a buy “even
with drama.”
Bernstein’s Toni Sacconaghi, for his part, said
that Tesla’s below $300 share price was an “attractive near-term entry”
point, but the analyst remains neutral on Tesla’s longer-term performance
until investors see if Tesla can pull off Model 3 quality, quantity, and
profit margins.
By Tsvetana Paraskova for Oilprice.com
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