Oppenheimer downgrades Tesla, says Elon Musk's handling of Twitter could hurt electric vehicle maker

Published Mon, Dec 19 20227:07 AM ESTUpdated Mon, Dec 19 20229:45 AM EST

Elon Musk's handling of Twitter is damaging sentiment around Tesla , according to Oppenheimer. Analyst Colin Rusch downgraded shares of Tesla to perform from outperform, saying he can no longer separate coverage of the electric vehicle maker from Musk 's controversial management of the social media platform. "While we continue to see Tesla evolving EV and autonomous technology in advance of peers and driving costs to levels those peers will struggle to match—and have tried to separate Elon Musk's non-Tesla endeavors (personal and professional) from our analysis on TSLA—we believe Mr. Musk's acquisition and subsequent management of Twitter now make that separation untenable," Rusch wrote in a Monday note. "The combination of Twitter's unclear cash needs and diminishing options for Mr. Musk to serve those needs amid the broad public backlash driven by inconsistent standards application for Twitter users, notably banning select journalists, is pushing us to the sidelines on TSLA," he added. Tesla shares, which are notably volatile, are down 57% this year. However, the analyst expects that the ongoing negative headlines around Twitter could create a "negative feedback loop" that would hurt sales of Tesla vehicles. "[We] believe banning journalists without consistent defensible standards or clear communication in an environment where many people believe free speech is at risk is too much for a majority of consumers to continue supporting Mr. Musk/TSLA, particularly people ideologically aligned with climate change mitigation," Rusch said. The analyst removed his price target of $436 on Tesla. The company's shares closed at $150.23 on Friday. "We believe increasing negative sentiment on Twitter could linger long term, limiting its financial performance and become an ongoing overhang on TSLA," Rusch wrote. To be sure, Musk conducted a poll Sunday asking Twitter users whether he should step down, with most respondents voting yes . Musk said there's no successor in place at the moment. Tesla shares jumped 4% in the premarket. — CNBC's Michael Bloom contributed to this report.