- Tesla dropped Tuesday after being downgraded by Nomura Instinet, which was formerly one of the most bullish firms on Wall Street.
- Shares came under renewed pressure last week amid senior personnel changes, and after CEO Elon Musk was filmed smoking marijuana during a live interview.
- While Nomura says Tesla is “no longer investable,” analysts from Baird said earlier this week that traders should “buy even with drama.”
- Watch Tesla trade in real-time here.
Shares of Tesla dropped more than 2% Tuesday in pre-market trading after Nomura Instinet – formerly one of the company’s most bullish supporters – downgraded the stock, saying the company is “no longer investable.”
Shah expressed concerns over the rising number of tweets from Musk per day, as well as his taunts of short sellers, his recent earnings call outburst, and his increasingly unpredictable behaviour.
Tesla was already under pressure before the note. Shares slid 13% last week after CEO Elon Musk was filmed smoking marijuana during a live interview, and amid personnel changes that saw chief accountant Dave Morton resign.
Worried about the “erratic behaviour of CEO Elon Musk,” Shah trimmed its price target to $US300 from $US400 – which is 5% above its Monday closing price, but still a huge cut. He also downgraded his rating on Tesla to buy from neutral.
But not all analysts are so negative. Baird published a bullish note on Monday, recommending traders continue to “buy even with drama.” The note helped send shares up 8.5% on Monday.
“While negative headlines around management turnover and executive leadership could be an overhang, we are labelling TSLA a ‘Fresh Pick’ as we believe strong fundamentals should drive shares higher,” said Baird analysts Ben Kallo and David Katter.
Tesla has been under even more scrutiny than usual after Musk tweeted on August 7 that he was considering taking Tesla private at $US420 per share and had secured the funding. He later reversed course.
Shares have lost 20% over the past month and are down 8% this year.
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