Tesla Motors Inc , Amazon.com, Inc. , Netflix, Inc. – 3 names that every serious trader has on his or her watch-list. So what is the outlook like for these stocks for the coming weeks? Wall Street seems bearish.
Tesla is Way Over-Valued
Brian Kelly, founder of Brian Kelly Capital considers Tesla Motors Inc as “an ATM stock,” meaning traders and investors will offload its shares to raise short-term cash. Speaking on CNBC’s “Fast Money,” he urged investors to avoid the stock right now due to the increased volatility. But was quick to point out that the long term prospects look encouraging.
The long-term outlook may be promising, but Tesla stock is currently much over-valued, according to Tim Seymour, managing partner at Triogem Asset Management. He expects the stock to head back to $220, and said it’s “very, very dangerous to own,” given the ongoing market uncertainty.
Steve Grasso, director of institutional sales at Stuart Frankel, was another bearish voice. Grasso said Tesla Motors Inc has failed to meet its own estimates for the Model S, and reckons there will be “huge” execution risk as the electric car-maker now tries to meet estimates for three other vehicles. He advises buying only if the stock closes above the $252-mark.
Ben Kallo was the only one advising investors to stay long on Tesla. The senior equity analyst at RW Baird is optimistic about the launch of the Model X SUV on September 29. The new vehicle has good margin potential. And considering that the media frenzy will continue even after the launch, the stock should do well in the medium-term. The Tesla Motors Inc Model 3 is also on his watch-list. He expects it to be priced around $35,000, with pre-ordering starting in March.
Investors Should Avoid Amazon, Netflix in Short-term
Dan Nathan, editor at riskreversal.com, thinks Netflix, Inc. is going all the way down to $80 a share. With so many institutional players stepping away, there just aren’t any big name buyers to support the stock.
Seymour thinks high valuation stocks like Amazon.com, Inc. and Netflix tend to under-perform when market volatility increases. Investors just don’t have the appetite for large amounts of risk.
Kelly reiterated that outlook. According to him, both Amazon.com, Inc. and Netflix have amazing products, but the premium valuations have made both of them unattractive. Kelly is a net seller of both stocks.
Steve Grasso likes Netflix, Inc. over the longer time-frame, but expects the stock to get beating up if the downward market trend sustains. He however did point out that Google could surprise in the coming weeks. Growth is good, and the stock is available at a reasonable price. Another vote of confidence is that institutions are holding on to the tech giant, despite the current bearish overhang.
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