Tesla has been in the fast lane the past month.
The stock has raced more than 40% higher since October, turning shares positive for the year.
Ari Wald, head of technical analysis at Oppenheimer, says it could speed even higher.
“The key positive for Tesla here is that macro conditions are supportive here — that equity markets are breaking higher in a very similar way that they did in late 2016 — and I bring this up because this is the last time we’ve seen this type of strength in Tesla where it’s really just surging higher to the upside,” Wald said Monday on CNBC’s “Trading Nation.”
“Now if you look at that period in 2016 and 2017, Tesla ultimately topped out at about $385, and I think that’s the long-term level to watch. The stock isn’t there yet so I wouldn’t bet against it,” said Wald.
Tesla needs to rally 11% to reach $385. That would mark its highest level since August last year.
“However, you can also see from that chart, very erratic behavior up and down so after a [more than] 30% rip over the last month, not one we’d be highlighting as a tactical idea either,” Wald added.
John Petrides, portfolio manager at Tocqueville Asset Management, says one key factor is preventing him from getting on board Tesla stock.
“I think for valuation Tesla still remains way too expensive for my blood,” Petrides said during the same segment. “We’ve seen this story before. They did this last year where they had two quarters of back-to-back cash flow growth and then they blew up the next quarter and the stock suffered and sold off dramatically.”
Tesla has not had negative cash flow since its first quarter ended in March. From late April when the report was released to early June, the stock tumbled more than 50%. The stock has rebounded 97% since that low.
“With the stock trading at current valuation with the price where it is today, I think Tesla will be better off doing an equity offering and dilute shareholders here as a cheap form of capital, short the balance sheet and start preparing for future growth with excess cash, but that’s just my opinion and I would stay away from the shares at current value,” Petrides said.
Disclosure: Tocqueville owns a de minimis amount of shares (200 in total) across $10 billion in assets.
