Tesla is on deck to report earnings after the closing bell Monday.<\/p>\n
The stock has lagged after hitting a record high in January. Shares closed last week at $643 per share, down nearly 30% from its highs.<\/p>\n
Tesla has been "stuck in the mud," trading within a descending triangle pattern, Piper Sandler chief market technician Craig Johnson said Friday on CNBC's "Trading Nation."<\/p>\n
"Over the last six months, this stock has just been consolidating."\u00a0<\/p>\n
In an email to CNBC, Johnson gave key levels to watch. He said a break below the $563 support level could open a pathway for Tesla to fall to and retest the November lows at $408, implying as much as 37% further downside. On the other hand, a close above $689 could pave the way for a likely retest of the old closing highs of $883.\u00a0<\/p>\n
"It's really going to come down to the next catalyst, which is going to be earnings," Johnson said. "This is a stock that our firm likes fundamentally," he said. "I think you got a real shot for this to break out of this triangle to the upside."\u00a0<\/p>\n
In the same interview, Chad Morganlander, portfolio manager at Washington Crossing Advisors, said he's a "big believer" in the electric vehicle market over the next five to 15 years, but he suggested that Tesla's valuation is too rich.\u00a0<\/p>\n
"Tesla's a great company overall," he said. However, "when we look at Tesla's valuation, we're looking at a 10x revenue number for 2022. That's very very high. … P\/E multiples are also really quite frothy."<\/p>\n
"We would be avoiding it, or if you own it, we'd be scaling back our position," he said.<\/p>\n
Tesla trades at nearly 120 times forward earnings, well above the 22 times forward multiple for the S&P 500.<\/p>\n