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Tesla shares fall as analyst slashes price target

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Tesla shares fell in the US Tuesday, following news that a former bull on the stock has slashed his price target for the electric car maker. Nomura Instinet also lowered its rating on Tesla, following the damage being inflicted on the business by the “erratic behaviour” of its CEO, Elon Musk.

Tesla shares ended the US Tuesday trading session 2.12% lower at $279.44. The stock has been trending lower in recent weeks that have included a plan to take Tesla private, which was withdrawn soon after being shared.

Tesla price target

Nomura Instinet has reduced its 12-month price target for Tesla to $300 from $400 previously. The equity broker also cut its Tesla share rating from ‘buy’ to ‘neutral’.

“We have been one of the most bullish on TSLA shares since initiating coverage last October,” said Nomura Instinet analyst, Romit Shah in a research note to clients, titled “No Longer Investable”.

“We continue to believe that Tesla could be a lot bigger than it is today,” Sha said, adding: “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 said.

Tesla cuts colour options

Following that price target cut, which also detailed Musk’s increased activity on Twitter, the enigmatic CEO tweeted that Tesla would be reducing its car colour options from seven to five, to help speed up the production process.

“Moving 2 of 7 Tesla colors off menu on Wednesday to simplify manufacturing. Obsidian Black & Metallic Silver will still be available as special request, but at higher price,” Musk tweeted.

The electric car maker, just managed to hit its previous production ramp up target, continues to work to further raise its output levels. How much impact a reduction of colour options will help with this, however, remains to be seen.

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