Tesla’s trek to all-time highs has put prospective buyers in a tough spot.
So says Ari Wald, senior technical analyst at Oppenheimer, who argued the electric car maker’s “whippy” shares, which surged nearly 4% on Tuesday to a record $471.63, have rendered the stock all but moot for new buyers eager to get in on the rally.
“The stock has really traded in a very erratic manner and with it now beelining higher, we’d say it’s probably too late to buy, but too early to sell,” Wald said Tuesday on CNBC’s “Trading Nation.”
Tesla’s trajectory has indeed been one peppered by big swings. The stock declined for much of 2019, racking up a more than 26% loss by October, before erasing the losses with a 97% rally in the last three months. Tesla shares closed at $469.06 on Tuesday.
Wald pointed to one particular chart to highlight Tesla’s overheated condition: a chart tracking the percentage by which Tesla has deviated from its 200-day moving average in the last seven years.
“The stock [is] currently trading 71% above its 200-day average. That’s the highest reading over the last six years, indicating it’s overbought, not necessarily — and really far from — a tactical idea here,” Wald said. “But on the flip side, we’d also point out from that chart that that stock stayed above 100% … over a five-month period over May to October of [2013], indicating being overbought isn’t necessarily a reason to sell the stock either.”
With no “strong signal” pointing in either direction, Wald left his Tesla argument there: not quite hot enough to sell, but far too overheated to buy.
Quint Tatro, chief investment officer of Joule Financial and a “big fan” of Tesla and its CEO, Elon Musk, said in the same “Trading Nation” interview that he couldn’t find a substantive, fundamental way to value Tesla at its current levels.
“You can’t, but that’s OK. That’s what makes a market,” Tatro said. “I’ve owned this stock in the past, I’ve traded this stock, but it’s virtually impossible at this juncture to apply any sort of fundamental rationale to owning a company like this.”
His advice was one of the few ways he saw investors being able to buy and hold onto a whipsawing stock like Tesla.
“I think that if an investor really wants to be buying and holding this and buying into the vision, they do so on dips, they do so months ago when it looked like the company was really going to fall apart,” Tatro said. “They dollar-cost average and they just hold on for a very, very long time. But as far as a fundamental investment thesis, there just isn’t one. But go Tesla. I’m a big fan.”
Later Tuesday, Argus Research raised its 12-month price target on Tesla to the highest Wall Street’s seen yet: $556 a share.
