Shares of Tesla (TSLA) dropped in morning trading after an analyst at Nomura Instinet downgraded the stock, which he believes is "no longer investable" due to the recent behavior of Chief Executive Officer Elon Musk.

TESLA 'NO LONGER INVESTABLE': Nomura Instinet analyst Romit Shah this morning downgraded Tesla to Neutral from Buy and cut his price target for shares to $300 from $400. In a research note titled "No Longer Investable," Shah, who had been one of the most bullish on Tesla shares since initiating coverage last October, expressed concern that the "erratic behavior" of CEO Elon Musk is "tainting" the Tesla brand. Shah commented that "Consumers are fickle and we suspect could become scared about buying a Tesla if they believe the company might not be around long term". The analyst, however, is still is hopeful for Tesla's future, saying he continues to believe Tesla "could be a lot bigger than it is today." Still, he thinks that Tesla is "in need of better leadership" -- an about face -- and is moving to the sidelines.

WHAT'S NOTABLE: In his research note, Shah added that Musk's behavior is "well documented -- taunting short sellers, NY Times interview, cave diver accusation, earnings call outburst, Joe Rogan podcast -- and likely contributed to the onslaught of executive departures in recent months." Specifically, Shah called out the recent departure of Chief Accounting Officer Dave Morton after just a month in the role, who resigned because of "the level of public attention placed on the company." In addition to Morton's resignation, Tesla's HR chief, Gabrielle Toledano took a leave of absence in August after just over a year in her role and told Bloomberg last week that she will not return to work at the company. During Toledano's leave, Tesla CEO Elon Musk tweeted that he was considering taking Tesla private and had secured funding for the effort. On August 25, Musk said in a blog post that the company will remain public. Tesla now faces shareholder lawsuits as well as an investigation by the SEC. Additionally, Musk appeared on"The Joe Rogan Experience", a podcast hosted by stand up comic Joe Rogan, during which Rogan shared what he said was a cigarette with marijuana and tobacco with the CEO. Musk also drank whiskey and fired a flamethrower during the interview. The appearance on Rogan's show comes not long after a recent interview with The New York Times, in which Musk said he has no plans to relinquish the chairman and CEO roles, though efforts are under way to find a No. 2 executive to help take some of the pressure off. Also last week, Citron Research's Andrew Left filed a securities class action lawsuit against Tesla and Musk, alleging that Musk "artificially manipulated the price of Tesla securities with objectively false tweets in order to 'burn' the company's short-sellers". 

PRICE ACTION: Shares of Tesla are down 2% in morning trading to $279.94.