Tesla is the 'absolute epitome of instability' and the stock should be avoided, market watcher warns

Tesla shares got burned last week in a sell-off that took its stock down 13 percent and cemented its position in bear market territory.

Mark Tepper, president and CEO of Strategic Wealth Partners, warns investors to steer clear of the embattled carmaker.

"I wouldn't touch this thing with a 10-foot pole. Right now this company is the absolute epitome of instability. We like buying companies with a good growth story, strong management team, that are reasonably priced and Tesla doesn't get a check in any of those boxes," Tepper said on CNBC's "Trading Nation" on Friday.

Tesla shares plummeted nearly 7 percent on Friday after its chief accounting officer, Dave Morton, announced his resignation after a month on the job. Its human resources executive, Gabrielle Toledano, will also not return from leave taken in August.

Those two high-level departures followed a rocky month for Tesla, largely due to CEO Elon Musk's actions. Musk tweeted in early August that he had secured funding for a go-private deal, a notion he later walked back and shelved.

"Elon is absolutely off his rocker whether it's tweets or whatever he's recently doing. Maybe the pressure is getting to him, but his behavior just seems odd. The management team is dropping like flies," added Tepper.

Tepper also pointed to supply chain issues relating to lithium-ion batteries, a scarcity of charging stations in some metro areas, and widening losses as reason to avoid the stock.

"We're avoiding this thing like the plague," said Tepper.

Any more losses for Tesla and it could break below a key support level that would trigger an even steeper sell-off, according to Craig Johnson, chief market technician at Piper Jaffray.

"We're approaching really important technical support at $242 and if we don't hold that $242 support level, there's not support until about $178 so a lot of pressure here in the stock," Johnson explained on "Trading Nation" on Friday.

Tesla shares have not traded at the $242 mark since January 2017. The lowest level it reached this year was a drop to $244.59 on April 2. It has not touched its next support level at $178 since February 2016.

"Breaking through that level, the shorts are going to jump all over this stock and push it meaningfully lower so I'm not touching this stock at this point in time," added Johnson. "This stock has clearly not found its footing by any stretch."

Tesla shares are down more than 15 percent for the year, tracking for their worst annual performance in the company's history since going public in 2010. The stock has fallen 32 percent from a 52-week high set in September 2017. Any decline of more than 20 percent marks a bear market.

Tesla declined to comment to CNBC for this article.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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