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A Former Big Tesla Bull Says Musk’s ‘Erratic Behavior’ Means Stock Is No Longer Investable

Joe Weisenthal
SUN VALLEY, ID - JULY 07: Elon Musk, CEO and CTO of SpaceX, CEO and product architect of Tesla Motors, and chairman of SolarCity, attends the Allen & Company Sun Valley Conference on July 7, 2015 in Sun Valley, Idaho. Many of the world's wealthiest and most powerful business people from media, finance, and technology attend the annual week-long conference which is in its 33rd year. (Photo by Scott Olson/Getty Images)

Nomura Instinet analyst Romit Shah downgraded Tesla this morning to neutral from buy in a note titled “No Longer Investable.” The note to clients starts by pointing out that previously he’s been one of the biggest bulls on the Street since initiating coverage last October.

Shah slashed his price target on the company from $300 from $400 citing the “erratic behavior of CEO Elon Musk.” Among Shah’s concerns: The increasing number of Musk tweets per day, the cave diver accusation, Musk’s outburst on an earnings call, his taunts of short sellers and his appearance on Joe Rogan’s podcast.

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Shah continues to believe that Tesla can out-innovate the competition and that the company may eventually be much bigger than it is today, but says it’s better to remain on the sidelines until the company has better leadership. Tesla shares have lost over 25 percent of their value since early August in the immediate wake of Musk’s "funding secured" tweet. The shares fell 2 percent in pre-market trading on Tuesday.

With the downgrade, bulls on the stock have become the minority with just 9 analysts recommending buy, 11 recommending a hold, and 12 recommending a sell, according to data compiled by Bloomberg.

Updates to add analyst recommendations in the last paragraph.

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