Tesla has been making headlines all week long after its big surge and subsequent sell-off, but Strategic Wealth Partners CEO Mark Tepper wouldn’t touch the automaker’s stock with a 10-foot pole.
“Large-cap companies aren’t supposed to trade like penny stocks.”
Tesla’s wild ride this week saw shares of the company touch 48% gains Tuesday, only to come crashing down again. The stock was down only 0.1% at Friday’s close after an roller coaster trading day.
“It’s one of the most dangerous stocks in the world,” Tepper said during an interview on CNBC’s “Trading Nation” on Friday. “I don’t want to own it; I don’t want to short it. It’s very speculative. Large-cap companies aren’t supposed to trade like penny stocks — go up 20% one day, down 20% the next.”
Tesla shorts, sellers betting the stock would fall, partially fueled the rally this week. But fears surrounding the coronavirus outbreak and effects it could have on production and vehicle delivery in China cut into those gains Wednesday.
Miller Tabak chief strategist Matt Maley thinks the stock may settle down for a bit after so much volatility.
“I sent out a note earlier this week when the stock was above $900 saying the thing had gotten ridiculously overbought and should pull back significantly, and I’m not … a perma-bear on the stock by any means,” Maley told CNBC. “When we see these individual investors come in and buy the stock like that, that is usually a sign that a top is it.”
The relative strength index measures a stock’s likelihood of being too pricey. Tesla was trading at 94 on the index, and anything over 70 is thought to be overbought.
“It is extremely overvalued right now,” Tepper said. “From my perspective, the most optimistic expectations are built in, so now there is execution risk.”
But the stock is so unpredictable, Tepper argues, that it’s hard to even guess where the stock will go next.
“To be honest, I have no idea where this stock is going to trade tomorrow, because it has a mind of its own,” he said. “The stock works when Tesla is in that planning and storytelling stage, but it doesn’t work in the execution stage. Right now, we are entering that execution stage, so for us it’s a no-touch.”
