Tesla is 'no longer investable' due to Elon Musk's antics, firm says
Tesla shares fell in trading Tuesday after a once-bullish research firm argued that the electric-car maker is “no longer investable” due to CEO Elon Musk’s erratic behavior in recent weeks.
Nomura Instinet said Tesla remains “positioned to deliver unprecedented revenue growth” because its control of the supply chain and battery manufacturing technology places it ahead of other companies developing electric cars. However, the firm downgraded its Tesla rating to neutral from buy, noting that some of Musk’s recent behavior could weaken consumer confidence in the brand.
“The issue though is the erratic behavior of CEO Elon Musk. During the second quarter, the switch seemingly flipped,” analyst Romit Shah wrote. “We are worried that this behavior is tainting the Tesla brand, which in terms of value is most important.”
Company shares fell more than 2 percent.
Facing significant pressure as Tesla ramps up production on its flagship Model 3 sedan to meet projections, Musk has been involved in a number of highly publicized incidents. The Tesla CEO has engaged in a public war of words with short-sellers, accused a British diver involved in the cave rescue of a Thai youth soccer team of being a “pedo” and appeared to smoke marijuana during an appearance on comedian Joe Rogan’s podcast.
In arguably his most public gaffe, Musk unexpectedly tweeted last month that he had secured funding to take Tesla private. Though the electric-car marker later abandoned those plans, Musk’s tweets triggered an SEC probe into whether Musk’s claims were based in fact.
David Morton, Tesla’s chief accounting officer, resigned within hours of Musk’s antics on Rogan’s podcast, citing the company’s “level of public attention.”
“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,” Shah wrote.