Tesla shares are careening out of control this year.
The electric car maker has skidded nearly 40% in 2019, tracking for its worst annual performance ever. The stock tumbled again Tuesday after Morgan Stanley slashed its bear case to $10 a share, down from $97, on concerns about increased debt and exposure to China.
Oppenheimer’s head of technical analysis, Ari Wald, said the stock could see a short-term bounce after its extreme sell-off this year, though predicting that is too difficult to be a solid strategy.
“The more important thing for us as a group of investors who prefer high-momentum and long-term trend following is that the trend is broken and that there’s more attractive opportunities for funds elsewhere,” Wald told CNBC’s “Trading Nation ” on Monday.
Based on the charts, Wald said it could get worse for Tesla before it gets better.
“The losses really did start to accelerate lower when the floor was broken at $250. That was the breakdown point. Oftentimes, prior support becomes resistance on the way back up so that’s what I’d be looking at as a ceiling. And now with this drop it places the stock back in the range that it had been in for much of that 2014 to 2016 period. The bottom of that range is $180, that would be the big support level on the downside,” he said.
A $180 target marks 10% downside from current levels. It would also represent a 54% decline from Tesla’s 52-week high set in August.
One-time Tesla fan Quint Tatro of Joule Financial has also lost faith in the company’s outlook.
“We were a believer and we wanted to try and embrace the whole concept and the back story. The fundamentals were never there. We were trying to again try to believe in the entrepreneur but fortunately … we got stopped out a long time ago and it’s really a no-touch here,” Tatro said Monday on “Trading Nation.” “The company clearly is going to need to raise capital. There’s significant headline risk.”
There is one way in which he counts himself as an investor, though – as a teaching tool for his children.
“I think the only way you’re a buyer of this stock like myself, as a father, as an educational tool I pick up some shares for my kids, I shove it in their custodial account and any time they see a Tesla on the road, they can point to it and say they own a piece of that company,” he said.
Disclosure: Tatro personally holds Tesla.
Source : CNBC
