It is not Tesla’s time.
So says Mark Tepper, president and CEO of independent wealth management firm Strategic Wealth Partners, as Tesla shares continue their monthslong losing streak.
The electric car maker’s stock fell by nearly 5% on Thursday following a downgrade from JMP Securities, which cited weakening demand. On Wednesday, Tesla missed estimates for its third-quarter vehicle output despite reaching a record 97,000 deliveries. Shares of Tesla are now down nearly 31% for 2019.
“I don’t think it’s going to be worth betting on anytime in the near future,” Tepper, whose firm manages $500 million in assets, said Thursday on CNBC’s “Trading Nation.” “What you have here is you have a company that’s just quite frankly notorious for overpromising and underdelivering, so there’s absolutely no reason to own the stock right now.”
Tepper attributed his Tesla trepidation to a number of factors. From the company’s subpar profit margins to its not-so-hot track record in China to weakening demand for new vehicles altogether, there’s a growing list of worries for investors to navigate, he said.
“The narrative has switched from one of innovation to … one of survival, so the stock’s going to get whacked every time they miss,” Tepper said. “You’ve got new competitors entering the market. You’ve got Volkswagen competing with the Model 3, Porsche with the Model S, so that’s not going to be good for sales.”
As Tesla continues to pour money into research and development, its push for technological progress could be holding the company back, Tepper warned.
“In the past, innovation has been really good for this company, but I think it might actually be hurting them right now, because where is the incentive to buy one of these vehicles today when you’re always being promised that they’re going to be so much better in six months, in 12 months?” he said. “When that’s the case, you wait. So, this is a stock that has more downside in front of it, in my opinion.”
JC O’Hara, chief market technician at MKM Partners, also predicted Tesla would see more pain.
“The trouble with this stock is it can’t get out of its own way,” he said in the same “Trading Nation” interview, citing Tesla’s long-term stock chart.
“We see a giant top formation formed going back to 2017. The stock struggled at that $380 level, could never really breach above it, but we do note there was some pretty good support at 250,” O’Hara said.
But since Tesla broke below that support level earlier this year, it’s been unable to gather enough momentum to rally back above that key point — and that spells more trouble ahead, the technician said.
“Every time it tries to rally, it’s met with additional selling pressure,” O’Hara said. “The fact that we can’t get back above that $250 level suggests to me that we’re going to test those June lows again at 185. So, I think the best play here is just to avoid this technical setup.”
It was trading above $231 in Friday’s premarket.
Tesla did not respond to CNBC’s request for comment.