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Tesla’s corporate governance problems could undermine the automaker’s competitive advantage by undermining its ability to invest long term and pursue breakout technologies, according to Daiwa Capital Markets. Analyst Jairam Nathan downgraded Tesla to neutral from outperform and slashed his price target for the automaker by about 20% to $195, which still implies nearly 8% upside from Monday’s close of $181.06. “While we could see a path for long-term investors to be rewarded through margin & growth uptick, the recent knocks on corporate governance could make the path more volatile,” Nathan told clients in a Tuesday note. Nathan pointed to a Delaware judge’s recent decision to void CEO Elon Musk’s $56 billion compensation package in part because key members of the board were not independent. The Wall Street Journal reported Saturday that Musk had used illegal drugs with some board members. “For instance, any Board reshuffle could slow decision-making and shorten investment time horizons,” Nathan wrote. Daiwa is maintaining its earnings forecast of $3.10 per share for 2024 and $4.25 per share for 2025 based on 13% to 16% delivery volume growth.
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