Tesla could rally nearly 40 percent, but that doesn't mean it's a buy, technician says

Analysts either love or hate Tesla.

RBC slashed its price target on Monday, suggesting 20 percent downside, and reiterated an underperform rating. Meanwhile, the rest of the Street has an average $335 target, which implies 30 percent upside.

Technical analyst Ari Wald is in the hate-it camp, arguing that aimless price direction means investors should steer clear of the stock.

"This is one we've been on the sidelines with, avoiding both on the long end and short side, just given how directionless and choppy it's been, and that's still the case," Oppenheimer's head of technical analysis said Monday on CNBC's "Trading Nation."

In the past 12 months, Tesla shares have moved as high as $387 and as low as $244.59. It is 34 percent off its August peak, a level reached after CEO Elon Musk falsely tweeted that the company had secured funding to go private.

"It's paid to buy it when it's ugly and sell it when it starts to look good, so with that in mind it probably looks more positive than not, just considering how bad it's performed," said Wald. "Two-hundred-fifty dollars is the big support range level, $360 is the upside there."

A move back up to $360 marks nearly 40 percent upside from Monday's close. However, that does not mean Tesla is a buy, says Wald.

"You can see the flat 200-day that exemplifies that directionless action," he said. "If we allocate toward stocks that trend, this isn't one of them."

Gina Sanchez, CEO of Chantico Global, said Monday the company's fundamentals also make for a bumpy road ahead.

"It's going to be challenging," said Sanchez on "Trading Nation." "You're looking at cutting deliveries estimates, delivery concerns, cutting demand estimates, and then concerns around margins — that $35,000 price point for the Model 3, there's big concerns that they're not going to be able to keep costs down enough in order to really produce a price margin."

Like Sanchez's concerns, RBC analysts' downgraded expectations were tied to problems with its deliveries and the run-on effect on revenue and margins.

"Those don't add up. Tesla is still being judged as to whether or not it can execute, and clearly the jury is still out," Sanchez said.

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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 CNBC and 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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