Long-time Tesla Inc (NASDAQ:TSLA) backer Wedbush removed the stock from its 'best ideas' list and slashed its target price on the shares, warning of a "very nervous few months ahead" for investors.
Analyst Dan Ives said his near-term view of the company "is increasingly becoming more challenged".
He said the nervousness for Tesla investors is because they remain the ones that "have been punched again and again" by Elon Musk's Twitter antics and the stock is now "deep in the investor penalty box until deliveries hit in early January and we get a better sense of the 2023 delivery/production trajectory".
With the Twitter deal Musk has "tarnished the Tesla story/stock and is starting to potentially impact the Tesla brand" with the "ongoing Twitter train wreck".
This week it emerged that the billionaire sold another US$4bn of stock recently to fund the purchase of the social media platform, following his statement that he would not sell any more after sales of US$8.5bn in April and US$7bn in August.
"Musk's attention focus from Tesla to Twitter, and ultimately the fear that this Twitter lightening rod of controversy on a daily (almost hourly) basis starts to negatively change the Tesla brand globally," said Ives in a note to clients on Thursday.
Having got Tesla through tough early times and now "sitting on top of the peak of the mountain with Tesla in a massive position of strength, Musk has managed to do what the bears have unsuccessfully tried for years...crush Tesla's stock by his own doing in what we view as a purely painful dark situation".
Tesla's stock is down roughly 25% since the Twitter deal closed and 50% over the past 12 months, with Musk having created a "a boy who cried wolf narrative".
While some investors have worried in the past about his ability to balance his time between SpaceX and Tesla, Ives said this "is nothing compared" to what is happening with Twitter, suggesting the Twitter "money pit situation will never end and continue to take up money, time, and attention from Musk instead that could be focused on Tesla".
There was also a suggestion that the demand for Tesla EVs could be impacted in an EV arms race where brand/perception are of supreme importance.
Wedbush maintained an 'outperform' rating, but lowered its price target from $300 to $250 to reflect the "Musk overhang".
The analyst's long-term bullish view of is "generally unchanged" as the broker believes EV demand and Tesla's production ramp are both still in the early days as part of the structural transformation of the auto world.