Trading Nation

Tesla under CEO Elon Musk has 'no transparency' and is virtually uninvestable, bear says

Tesla has 'no transparency' and should be avoided, says strategist
Tesla has 'no transparency' and should be avoided, says strategist

Tesla CEO Elon Musk's ongoing battle with the Securities and Exchange Commission has far-reaching implications that are making the stock practically uninvestable, Tesla bear Mark Tepper said Tuesday on CNBC.

"This isn't the Wild West. You can't run your business like a cowboy, especially when it's publicly traded and even more so when the SEC has you in its crosshairs," Tepper said on "Trading Nation." "So, with Tesla right now, there's just no transparency, and how can you possibly invest in a company that's deceptive?"

Tepper cited a series of issues tied to the electric auto maker's Model 3 sales, including complaints about quality and product delivery. In September, he called Tesla the "absolute epitome of instability" and steered investors away from the stock.

"There are stories of people not getting their vehicles and then not getting their refunds for months, so now these consumers don't have the money to go out and buy another car," said Tepper, president and CEO of Strategic Wealth Partners. "The tax incentives are phasing out, so that tailwind is going bye-bye. And Tesla's actually now incentivizing people not to take a test drive. I mean, isn't that a red flag?"

Add to that the fact that Tesla has a nearly $1 billion debt payment coming due on March 1 and recent news that Musk has taken out mortgages on five of his properties, and Tepper expects more pain.

"That's not a good sign," he said of Musk's mortgage spree. "And just look at the consumer: We just recently heard that there's a record number of people that are 90 days late on their car payments. You think that's good for Tesla? No. I mean, that's why you see the auto parts retailers rallying today on the back of more good earnings: AutoZone, Advance Auto Parts and O'Reilly. That's where we'd be putting our money."

BK Asset Management's Boris Schlossberg also saw a number of pressures colliding to weigh on Tesla's stock, which closed less than half a percent lower on Tuesday. He predicted "very tepid growth going forward," citing contracting demand and strategic errors.

"I think Tesla's problem isn't Musk's tweets, but the very problematic nature of demand. I've always argued that once the golden halo is off and once Tesla loses its cool, which I think it really has done among consumers, it loses its valuation," Schlossberg told CNBC.

"It's basically now nothing more than a sedan company, and a sedan is actually one of the least popular car models out there right now," he continued. "So I think they've made a tremendous amount of strategic mistakes, I think the consumers are kind of turned off at this point by the product and I think I find it very, very hard not to see the stock go further down in the next couple of months."

Shares of Tesla were initially down at Tuesday's open, but reversed course to close the session slightly lower. They were ujp 1.5 percent in Wednesday's premarket but are down more than 10 percent year to date.

CNBC has reached out to Tesla for comment. For more on what expert market-watchers had to say about Tesla's feud with the SEC, click here.

Disclosure: Tepper's firm has a position in O'Reilly Automotive.