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Tesla Motors Inc. (TSLA): Avoid Large Positions Ahead Of Earnings

Tesla Motors Inc. (NASDAQ:TSLA) is to post its fourth-quarter earnings on Wednesday this week with CNBC’s Fast money crew warning of a cautious approach heading into the big event. The results come in the wake of the company, not registering the best of runs last year, seen by the stock plummeting amidst growing concerns over, overvaluation as well as imminent competition. Guy Adami admits it may be better to avoid having a big positions heading into the earnings session.

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Tesla Motors Inc. (NASDAQ:TSLA) stock price has been ripped over the past few weeks raising questions as to whether the price has clocked its rock bottom and may start to bounce back. Failure to meet or beat earnings estimates could have a negative impact on the stock which may see the downward trend persisting.

“How do you trade it? To me you are at the upper end of the bracket, I think you still trade it between that $185-220 level  look for  a potential breakout  next week. I don’t think you have to have a huge position going into the earnings because frankly I think it is a coin flip,” said Mr. Adami.

Brian Kelly also shares the same sentiments as Adami, reiterating one needs not to own a large position in the stock with the best option being the purchase of calls if there is any chance of the stock surging.

The impact of China in terms of unit sales remains key according to Steve Grosso, who believes Tesla Motors Inc. (NASDAQ:TSLA) could trade below the $200 mark if it paints a negative picture on this front. Wall Street will wait to see what Tesla has to say about its production capacity as well as the possibility of launching a new model this year. Guidance should also paint a clear a picture of the company’s prospects this year at the back of the ongoing construction of the Gigafactory.

Failure to meet production expectations could see the stock plummeting to lows of $180 a share according to Timothy Seymour, which should provide a perfect entry point, in this case.

“I have never seen a company that has had so much on the map; you have people between 20 and 35 cents in terms of EPS. You have revenues from $1.05 to $1.4 billion on the high end. This is a company that no one knows what to do, and if they miss all production and the unit expectations for next year, I think they are going to be guided somewhere downward. I think the stock breaks $180,” said Mr. Seymour.

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