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While many people are extremely bullish about Tesla (TSLA), some other analysts think that it’s a little too volatile and dangerous at the moment.
Tesla stock (TSLA) is very easily one of the world’s most popular stocks, at least as far as 2020 is concerned. Prices have jumped so high recently that it has rattled a lot of the market’s most seasoned analysts and even regular traders and investors. Towards the end of last year, many people slowly became extremely bullish about Tesla’s chances. However, as bullish as its trajectory currently is, some still think Tesla stock is dangerous.
Tesla Stock Is Dangerous
Mark Tepper, the CEO and President of financial services company Strategic Wealth Partners, wants investors to be careful. According to him, Tesla stock right now is a little too dangerous for anybody to want any part of it. Speaking to CNBC’s Trading Nation recently, Tepper said:
“It’s one of the most dangerous stocks in the world. 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-op 20% one day, down 20% the next.”
Tepper is referring to Tesla’s wild movement last week. At its highest point, prices had jumped as much as 48%. Days later, it had shed a lot of that weight, dropping as much as 17% in one day. The plunge was a result of Tesla’s announcement of a possible product delivery postponement because of the coronavirus outbreak in China.
Just How Dangerous Is Tesla Stock?
During the same conversation, the Miller Tabak Chief Marketing Strategist, Matt Maley, also warns about TSLA. According to him, Tesla has become “ridiculously overbought”. Maley adds that even though he’s not completely bearish about the stock, he expects TSLA to “pull back significantly”.
Also, Tesla’s Relative Strength Index (RSI) sat at a high 97, way higher than the 70 limit before a stock is considered overbought.
This is not the first time that someone is sounding a note of warning about Tesla’s stock. Last month, consumer advocate and former presidential candidate Ralph Nader gave a somewhat bearish forecast on Tesla stock. According to him, the company’s price surge is the reason the “stock market bubble implodes.”
Nader supported his opinion by pointing out the heavy jump in Tesla’s valuation. At the time, Tesla had just crossed the $100 billion mark and had become the world’s second most valuable auto company after displacing Volkswagen. Nader considered this a problem because of both companies’ sales figures. He pointed out that throughout 2019, Tesla sold less than 400,000 vehicles compared with Volkswagen’s 10 million.
Is Tesla the new Bitcoin?
Also speaking to Trading Nation, an Ascent Wealth Partners exec has drawn an interesting parallel between Tesla and Bitcoin. According to him, Tesla’s surge can be likened to Bitcoin spikes in previous years.
Back in 2017, Bitcoin price jumped almost 600% from $3,000 to $20,000. Since mid-last year, Tesla seems to be on a similar, albeit slower trajectory jumping over 300%. This much volatility is quite common with Bitcoin.
Since TSLA hit highs close to $970 and fell back just above $730, Gordon believes that its new bottom will be somewhere between $650 and $675.
He, however, adds that the best way to get into Tesla stock is with “defined risk strategies”, specifically referring to Options.