Owning Tesla Inc's (NASDAQ: TSLA) stock requires investors to believe in the company's "real long-term" and buy into CEO Elon Musk's vision, according to Chantico Global CEO Gina Sanchez.
Why Tesla Is A 'Faith Stock'
Tesla's long-term vision of selling a diverse fleet of electric cars at multiple price points is well understood by investors.
Yet the stock appears to be plagued by both new and old concerns. Investors were worried about production issues as little as three months ago. Once investors find relief, the stock "overshoots" and "naturally will come back," Sanchez said Friday on CNBC's "Trading Nation."
The drive forward will likely include many similar pullbacks along the way, which makes Tesla a "faith stock," she said.
"No matter how bullish the story, it still has to block and tackle and meet all of the interim requirements in order to maintain that bull story."
Patience Is Needed
Tesla's stock is known for its extreme movements in either direction over short periods of time, MKM Partners chief market technician JC O'Hara also said on the "Trading Nation" segment.
The stock was slashed in half last June and hanging on to a multiyear support level of $185, he said; fast forward just a few months later and the stock has doubled in value and is trading in overbought conditions.
O'Hara's advice to Tesla investors or those on the sidelines? Be patient.
"You know an overbought stock at resistance," O'Hara said. "I would rather exercise some patience. Wait for a pullback, and I think that'll be a better tactical buying opportunity."
Tesla shares were trading 2.5% higher at $344.28 at the time of publication.
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Photo courtesy of Tesla.
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