Closing Bell - Closing Bell Overtime: Trading Tesla’s Turbulent Year 12/27/22

Episode Date: December 27, 2022

Tesla is on pace for its worst year-ever. So, what continues to drive the selling and when could it stop? Our all-star panel of Wedbush’s Dan Ives, EMJ’s Eric Jackson and Puck News’ William Cohan give their expert takes. Plus, Dan Greenhaus of Solus Asset Management gives his forecast for 2023. And, Shannon Saccocia of SVB Private breaks down big tech’s bad year and what might lie ahead for the sector in the New Year.

All right, Sarah, thank you very much and welcome everybody to Overtime. I'm Scott Wapney. You just heard the bells. We are just getting started from Post 9 here at the New York Stock Exchange. Coming up in just a bit, Solis' Dan Greenhouse. He'll tell us what the new year might hold for your money and if better days lie ahead in 2023. We begin, though, with our talk of the tape. The crash in Tesla shares as that stock suffers through yet another rough session, hitting yet another rough session,

hitting yet another 52-week low, now on pace for its worst year ever. The big question is what continues to drive that selling, and most importantly, perhaps, when might it stop? Let's ask the star analyst Dan Ives. He covers Tesla shares for Wedbush, has an outperform rating, something it has not done lately, to say the least. Welcome. It's good to see you. It's stunning. I'm looking at it right now. It's like a double take. It broke 110. Okay. It's going to finish below that today, barely hanging on to 109, nearly a 12% decline. I feel like we've had this conversation a lot lately. And every time we do, it's for several percentage points lower than the prior time we had the conversation. What in the world is going on here?

Well, I think Musk set off the five alarm fire. You know, that really started this in terms of the Twitter train wreck and what's really been a black eye for Musk and a black eye for Tesla. And now the demand, the second leg, demand is starting to soften in China. China, that's the hearts and lungs of the Tesla story. So right now, that one-two punch, it's really a perfect storm for Tesla stock. And I can tell you, institutional investors calling me

are as white-knuckle nervous as I've seen them going back four or five years. Okay, so you're speaking to institutional investors who are calling you and saying, okay, Ives, you continue to tell me to buy the stock. I've got to outperform on it. What should I do? What do you tell them?

And then it's like, where does the stock go? So what stress test? Like, is it $5 earnings power? Is it less? Could this ultimately go lower? Could this trade $75, $8? They're asking you those questions. And those are the questions they're asking me.

Because right now, we're in basically uncharted territory because of a self-driven, what I view as a $600 billion mistake. When you combine all that, Musk really started here. Well, how low can it go? So, look, we believe $5 of earnings power is really, even when you stress test it, ultimately, I think, where Tesla goes, you know, in terms of 2023. You look at units, worst case, we think potentially 1.7 to 1.8 million in terms of where units could go. I think you're starting to get to a point here, you get to 95 to 100 hours.

We start to get to a point where that is almost, you are baking in that they will probably do four, $4, 450 of earnings. So I think we start to get below 100. We start to get to, you know, what I view as extreme panic in the name. I mean, when you have an outperform rating on the stock and you have an outperform way up in the clouds and you have an outperform as it comes back down to earth, people start to question your credibility on the name. I'm sure you're thinking about your reputation on this stock. How does that factor in

how you're thinking about it today and whether that will cause you to change your rating on it simply because the goalposts seem to have moved? No doubt. And I can tell you in decades of covering tech stock, it's a nature going up, you're a hero going down. You know, obviously it continues to really be targeted in the back. I view it as, is this a transformational play on electric vehicles, where today it's 2.5% of the U.S. auto market? I believe it is. You still believe it is? I truly believe that ultimately 70% of the sell-off is really Musk, Twitter, train wreck driven,

rather than core fundamentals. Now, with that said, damage is done, as we've talked about. Black eye, how do you ultimately start to regain your footing? If they, what I believe, could get to 35%, 40% growth in a worst case going into next year, you talk about what could be $5 earnings power. Then I think we look back in this period, and Blake, there was way oversold on the downside no, no doubt, Scott, this is definitely what I view. It's a fork in the road. It's a moment of trust for Musk, you know, in terms of where we are. But you're telling me of all the issues, the competition, the China shutdowns, Elon selling. It's the Twitter

distraction that is the bulk of the selling. I didn't even mention the fact, the re-rating that stocks like this have taken in a non-zero interest rate environment. And this was one of the poster stocks that probably benefited greatly from zero interest rates and a frenzy in the market that happened as a result. A stock that probably never should have been $1.24 trillion in market cap at its peak. And the jury is out as to whether it should be where it is now, which is now smaller than a Walmart or an even JP Morgan. Yeah, and I do believe, even though we have obviously the macro, multiple compression, everything else, if you look at the Musk Twitter situation, he did what no short could do, no bear, no conspiracy theory. Self-driven.

The $44 billion ultimately led to what could be another $500 to $600 billion. And that's why this is going to go down as just a historically horrific move for Musk. Then now he needs to course correct. Otherwise, this is just going to continue to fast. What does that mean, course correct? I mean, what stops the selling? What does he need to do? There's three things.

One, a CEO of Twitter in the first two weeks of January. That's truly a CEO, not just a figurehead and a yes person. Two is that to actually, with the board as well, coming out in terms of not selling stock, not just saying it, because that's the boy that cried wolf, actually saying he's not going to ultimately sell stock and putting some actually paper behind it. Okay, let me ask you this, okay, because he's just recently said that he's not going to sell anymore for the, you know, what, the foreseeable future,

I think we can say. Do you believe him? Well, it's a Pinocchio moment, because ultimately he's said it many times, continue to sell. Now, board does have to get involved, and there has to be at least a 10B5 plan. There needs to be something so investors understand what the goalposts are with selling. And the third, they need to come out with guidance, rip the bandaid off, don't give lofty numbers they're going to have to continue to cut. If they do those three things, then the stock ultimately bottoms. Who are the sellers? I mean, are we talking about like retail getting margin calls who are selling? Or have we crossed the Rubicon into, you know, once very large believers who are throwing in the towel?

Who do you think is is driving this? Clearly, retail has played a big role. But I think institutionally, the story's changed because ultimately as an institutional investor in this market, the last thing you want to do is ultimately have some sort of Twitter madness, Howard Hughes type situation in terms of that's really your exposure in terms of Tesla stock. That's the problem because the spider web here that Musk created has now really been an albatross on Tesla stock. So for institutional investors, that's really right now, I think, the nervous point that we really didn't see. I would say if we go back, we'd have to go back four years to where we had this type of nervousness. What happens if we have a recession? Because he himself is out there saying the economy is bad and it's going to get worse. So if he is saying it himself, what does a recession mean for where the price is today, as I said, settling out barely above $109 a share? Yeah, I think you're already

baking in a 10, 15% cut to numbers here. Now, I believe some of that is recessionary, as we've talked about. We lowered our numbers last week. But if you get to a harsh recession, doomsday, of course, and everything is sort of thrown out. But I believe baked in here, you're already factoring in number cut. But ultimately now, they need, like, because Musk from the street perspective went from a hero to now a villain. And that's part of a big reflection in terms of that multiple on Tesla stock. What was the Musk premium, you know, premium do you think that has always been in the stock because of the hero status, the genius status, the cult status? If you peel that out, what kind of premium out of the name

are we talking about? Because we've always assumed that it was always in. Yeah, I think that's about $70 to $80 per share. If we actually try to quantify it, what's ultimately been taken out of the stock because of what I'll call the must premium, what's really become actually reversed because of the Twitter situation. I think that's the biggest thing here because now, from an investor perspective, okay, you put your spreadsheet down and be like, where does the stock go? Normally, it was that must that could ultimately save the day. Now, instead, because of Twitter, you've given him a microphone where it's actually become more of a liability than an asset.

All right. I want you to stick with me for a bit. Let's expand the conversation now and bring in someone who recently bought Tesla shares. Eric Jackson came on this show a couple of weeks back, you might remember, told me why he did it. Said it had simply come down way too much. Apparently not. Eric is back now along with William Cohen. He's written about Mr. Musk and Tesla for Vanity Fair in the New York Times. Dan Ives, of course, is still with us. Gentlemen, it's good to see you. Eric Jackson, to you first. Do you have buyer's remorse? Yes, I do. Well, I have to tell you, Scott, I had to sell the stock a couple of days after the last appearance on the show, which was, like you say, only a couple of weeks ago. I mean, the stock basically has been down seven, eight, nine percent a day ever since then. Today, it was down 11 percent. Today was the second biggest trading volume day of the year

for Tesla. Over 200 million shares traded. I don't understand it. I agree with Dan. I think a year ago, Musk was a hero. And there was panic buying to the upside that took the stock to $400 a share towards the end of 2021. And it didn't deserve to go up there, whatever it was, eight, nine times sales. But I think right now we're in, I still think we're in the latter stages of this, but it's panic selling, you know, and we're in this downward cycle. Good news is there's only three more days of being able to trade losses on stocks for 2022. So at some point, this thing is going to stabilize, you know, and then I'll look to get in. But I feel like you're telling me, though, that you panicked in a sense yourself thinking, oh, no, what did I do? It could go actually a

lot lower than I ever thought it could, certainly in the near term. And then you sold. Well, you know, I bought it at 150 today. It's what, 109 right now. So, you know, after a couple of days of 8 percent down days for a massive stock like Tesla, I mean, that's, I don't know where the volume is coming from. It's huge volume though. You have to respect it. And I chose this kind of stand aside from, from whatever is going on. You know, the last day that there was a huge volume day like this, it was announced a few hours later that Musk had just sold whatever it was, $3.9 billion over the last three trading days. I don't think we'll get that again. But, you know,

obviously, some people were trying to get out before the end of the year. Phil, you've seen a lot of blowups in your day. You've written about a lot of big personalities around Wall Street and elsewhere in your day. What do you make of this one? Well, I think you've got a totally self-inflicted wound here, Scott. Twitter was a huge mistake on every level. I mean, from an M&A perspective, when I was an M&A banker for 17 years, I've never seen anything like this ever in the M&A market. So that was a huge self-inflicted wound to buy something, to overpay for something for $44 billion that you did not need to own in any way, shape, or form, and then completely destroy that value in, what, six weeks? He's run through the equity that was put into this deal and probably half the value of the

bank debt. So he took something from $44 billion and drove it down to $6 billion in two months. That's pretty unprecedented. The Tesla selling, I think, is extremely well advised. I would get out of the way of this thing. It is falling and going to fall further, you know, 10 percent in one day, 72 percent for the year down, a $345 billion market cap. On what? I mean, why should it be worth more than the pretty much the rest of the car industry combined? It shouldn't be and it won't be. There's way, way too much competition now. And Elon Musk has shown himself to be, you know, completely off the reservation at this point. You know, Bill, I read an article that you wrote for The New York Times in which you say, quote,

Mr. Musk has always found people willing to take a chance on him. But Wall Street's confidence can prove ephemeral. And Mr. Musk's personal antics are testing the limits of investor infatuation. He's on the verge of becoming a cautionary tale about a Silicon Valley genius felled by hubris. You wrote that four years ago. Four years ago. And we're still having this conversation.

Well, I mean, to say I was right is comforting, I guess. But that was around, remember, 420, a share, taking it private. I mean, that was ill-advised then. Everything he's done since then is totally ill-advised. The stock, as Dan said, I mean, the stock being worth a trillion and a quarter dollars was absurd. And Scott, you agreed with that. I mean, at $345 billion, it's absurd. The guy is fine. He's maybe a smart investor. I mean, what's going on at SpaceX is, you know, quite phenomenal. Twitter is a total disaster, did not need to happen. Tesla is extremely overvalued and has been for years, four plus years at least. So I think this is a reckoning that's,

you know, well-deserved and long overdue. Dan, how do you respond? Hang on two seconds, Eric. I mean, how, Dan, do you respond to what Bill Cohen says? Stock's going lower. There's no business even being where it is now. Get out of the way were the words that he used. Look, and I think right now that short narrative obviously has taken hold. I think the street views it that the plane's crashing and Musk is focused on salted or unsalted pretzels. And that's why right now you don't need a TED striker. You need a pilot to navigate through this storm.

That's what the street needs from Musk. He starred the fire. He's the only one that could extinguish it. Eric? I'd say with respect to Bill, I mean, this is a big, profitable car company in EVs. And I think all of us would agree the rest of the industry has to play catch up. To say that all these other car companies are going to jump in with their competitors. Yeah. And guess what? They're going to lose money on EVs for the next 10 years. Right now, Tesla is massively free cash flow positive, EBITDA positive. I think today they closed around 17 times enterprise value to EBITDA as a multiple. That's lower than it was in 2019

when it was some people thought it was going to go bankrupt. It's not going to go bankrupt. Next year, its net new deliveries are going to increase substantially, probably their biggest ever for a year, and followed by 2024 for another huge increase. So I think we have to step back. And all of us would say Twitter has been a distraction. And I'm sure if Elon was on this panel, he'd say, yeah, I wish I'd never done that deal. But look, this is still a great car company. It's gotten swept up in a lot of negativity. You know, you yourself, Bill, said that SpaceX is a great company. I think we'd all agree. And yet we're not talking about it today. Why? Because it doesn't trade every day in the public markets. Tesla is the same. It's a great company. Eventually, you know, price will reflect that.

Bill, how do you respond to that? Well, look, I respect Eric, you know, and I think a lot of the Tesla fluff is related to the meme stock aspect of it. Most of its profits until recently have come from selling carbon credits, which is not the same as selling electric vehicles. You know, so to me, you know, it's totally still overvalued. There's a lot of competition coming and the competition is very good and very experienced. And Elon Musk is not a technologist. He's a good investor. He bought Tesla when it was down on its luck years ago and he's obviously turned it into an extremely valuable company for him personally. But think how much he's squandered this year

and with all due respect to Eric, Eric took it on the chin at big time in what, two months time from investing in this thing. He's never, you know, this was predictable for a long time that this is coming down to Earth. And it still has far to fall, if you ask me. Dan, the competitive standpoint that people talk about, whether it's, you know, what's going on in China or the OEMs here in the United States, the GM and Ford, is this more of a legitimate competitive threat today than it ever has been

in the past? Or was the lead from Tesla just so significant that it's going to take a long, long time for any material change to happen in the dynamic? I think up to now, it's really been Tesla's world. Everyone else was paying rent in terms of the EV market. But now if you look in the 313 area code, I mean, they're really popping champagne, GM, Ford, and others, because this is self-inflicted in terms of brand issues that Musk has done. And you look at China, it's an arms race that's going on there with NIO and everyone else. So that's why right now, it's a moment, it's a fork in the road for Musk to ultimately continue to drive deliveries. But no doubt, competition increasing.

That's why it's created a perfect storm for the stock. But Eric, you just said you would look at this as an opportunity to get back in. I'm curious, at what level? It's not so much at what level, Scott. I would say it's more of the stock has to stop going down 8%, nine, 10 percent a day for a while, for a week, two weeks. Let's see some stability in this thing. Let's see the volume come down. Let's have people catch their breath. I think I think that's what's needed. Obviously, there's going to be earnings at the end of January, which could be a catalyst either way.

So, you know, I think the selling is going to stop in early January. I'm certainly going to be paying attention then. And we'll just have to see where it goes. Bill, you're one of the best at summing this sort of thing up. You do it for a living. How's this chapter going to end for Tesla, for Twitter and for Mr. Musk himself. You know, we're going to wait and see what Walter Isaacson comes up with, who's been writing a biography of Elon Musk. I mean, you could not have scripted this any better narratively from sort of a cinematic narrative, you know, a book-length treatment of this guy. I mean, to have somebody come along in the prime of their life when they're worth $250 billion and squander $100 billion this past year by buying a company

that he had no need to own and then destroy the value not only his own, but that of his investors and the banks who came along for the ride. As I said, I've never seen anything like it. And now it's the carryover effect, the contagion over to Tesla. We're talking serious capitulation at this point, Scott. And if I'm Walter Isaacson, I'm laughing all the way to the bank. Yeah, we can't wait to see what he what he pens. I appreciate it so very much. I enjoyed the conversation, Eric. Bill, thank you so much. Dan Ives, I appreciate you being here at Post 9 as well for this conversation. Now to our Twitter question of the day. Will Tesla see a comeback next year? You can head to at CNBC Overtime on Twitter. Cast your vote.

We'll share the results coming up a little bit later in the hour. We're just getting started, though, here in overtime. Up next, the year end reality. Forget the rally. Our hopes of that dwindling as we head into the final days of 22. Could better days be ahead for stocks? We'll discuss that with Solis' Dan Greenhouse. And later, charting the start to 2023. BTIG's chart master, he's Jonathan Krinsky. He is back with the levels he is watching as we head into the new year.

We're live from the New York Stock Exchange. OT is right back. All right. Stocks giving investors little reason to believe in a year end rally. But does a rough finish mean another rough patch lies ahead? Let's ask Solis Alternative Asset Management Chief Strategist Dan Greenhouse back with me at Post 9. It's good to see you. So much for seasonality. I thought that was on our side. We are off the lows of the mid-October level. Obviously, December has not worked out the way December typically does, but seasonality is more than a month or a week. It's the fall through the subsequent winter. And so obviously, there's still January and February, let's say, for seasonality to work.

You still think it can? Yeah, I mean, again, we talked about this the last time I was on. You do have a couple of tailwinds here. Obviously December performance has not been great, but you do have a couple of tailwinds here that might carry over into the new year with the caveat that things are every bit as uncertain in the first quarter as they are here in the fourth quarter. But, yeah, again, seasonality goes through January and February.

So so the seasonal trade, if you will, can still work. Yeah, I think the pushback on that is that, you know, the central banks around the world don't care what the temperature is outside. No, that's right. Or what time of year it is. And to people like David Tepper, that supersedes everything. That the wall of tightening, if you want to call it that, the wave, really, across the globe is too substantial a wall for us to scale. And I would agree with that. To be clear, the seasonality trade is about positioning and flows more than any fundamental or economic inputs.

So obviously, not obviously, but there are two separate things. Seasonality trade is about positioning and flows more than any fundamental or economic inputs. So obviously, not obviously, but there are two separate things. But to the point about central bank liquidity and rate hikes, I mean, that's the overriding theme that persists into the new year. The degree to which central banks around the world, not just the Federal Reserve, but all central banks more or less, have drained liquidity and tightened policy. That increase in global short rates is a terrific leading indicator for economic and market performance looking out, call it, six or 12 months. Is it still underappreciated? I think that's the key part of this story. The bulls have come on through this period and suggested, well, they're slowing the pace. That's bullish. They're not going to be able to raise rates as high as they can because the economy is slowing. And they're not going to

have to because inflation is coming down. The other side of that is you're getting it totally wrong. The risk is to the upside on the ultimate terminal rate. And inflation might be stickier than people think. And central banks around the world are tightening at a brisk pace, and they're going to go higher than we think. Yeah, and the discrepancy between those two positions, both entirely valid, speaks to the level of uncertainty that we're dealing with in markets here. I mean, you've got several prominent economists making the case that inflation is coming down, not just goods, but on the services side of things as well. And that's going to give the Fed a tailwind, so to speak, to stop raising rates and potentially even cut them towards the back half of next year, not because the economy is worsening per se, but rather because just simply from the inflation side of things. And on the other hand, you've got fairly prominent economists that do this work that are assessing the landscape,

that are looking at it from an incredibly dire position that says, hey, you can't raise rates 500 basis points in 12 months and not have pretty severe economic repercussions. I would argue I'm somewhere in the middle, which is, I guess, a safe place to land. But you do have pretty prominent and accomplished people in both sides of those arguments. What's a more interesting tell on kind of where we are and maybe where we're going? The fact that mega cap tech was as bad as it is and the market isn't worse or merely the fact that mega cap tech is bad. And if it doesn't recover, maybe the market can't really get any footing either. Well, I mean, listen, I think to be clear,

I talked about this with the producers, like if you had told me to start the year that all the tech stocks, NVIDIA, Facebook, Microsoft on down would be down 40, 50, 60% year to date, there's no way I would have told you the S&P would be down 20%. I think everybody would have agreed

it'd be down considerably more. The fact that it's not speaks to the strength that we've seen, particularly in energy, but also in health care. But more generally, can the market rally without tech? I would argue that it can. And I'm reminded of, I want to say it was 2013 when people were referring to the market. I think it was 2013 when people were referring to the stock market as the NBA market, the nothing but Apple market. And then Apple collapsed and the market continued going up. I think the way, the reason why passive investing for large cap equity usually works out is because things, the puts and takes in markets, it's very difficult to time when Apple's going to go up and

Apple's going to come down and the rest of the market's going to go down and then come up. And a broad index of 500 stocks is usually going to compensate for those losses. So the short answer to your question is, yes, I think the market can keep going up, can start going up, even if tech doesn't. Do you have a good feel about 23? No. You don't? No. You think we're in for another? Because historically, if you have a down 20% year, obviously you've had some sort of crisis going on. You don't generally back it up historically with another horrific year.

No, that's right. I mean, just in general, back-to-back down years of any amount, as I'm sure people have been discussing ad nauseum, are pretty rare. The two most recent ones in the post-war era are in the mid-'70s, when you had two back-to-back years, and dot-com when you had 2000, 2001, and 2002 were all down. And the worst part about 2000 to 2002 was it got worse as it kept going on. Are we heading for a similar scenario, do you think, or no? Well, listen, the valuation—

You've had a big reset already. Yeah, the valuation reassessment, if you will, has occurred to a great degree. Typically, you'll see multiples generally compressed by, call it, a third. That's largely speaking, at least at the bottom, what had already happened. We've obviously had a bounce here and corrected some of the correction. I don't know that you're heading to necessarily a back- back to back down year. But to your first question about how certain am I, I think anyone who tells you they have any sort of wide confidence in. I don't think I use the word certain. I said like idea. No, I was giving you a little bit of leeway there. I'm not even

sure I have an idea. I wouldn't like we have a frame of reference for I think everybody has a frame of reference for how they think it's going to unfold. But the the enormous amount of uncertainty around inflation, around multiples, around tech specifically, around energy prices, the war, et cetera, et cetera, makes next year obviously incredibly difficult, even more so than normal. That's that wall we were talking about. I appreciate it very much. It's Dan Greenhouse joining us here at Post 9. It's time for a CNBC News Update with Christina Partsenevelis. Hi, Christina. Hi, Scott. Here's what's happening right now. The Supreme Court is leaving in place pandemic-era border restrictions, allowing migrants to be quickly expelled after being caught at the U.S.

Mexico border. The high court will now consider a challenge by 19 states seeking to keep the rules in effect. Americans will get a better look at former President Trump's tax returns just before the new year. The House Ways and Means Committee plans to release the documents on Friday, capping a years-long battle to make the records public. At Dallas Love Field Airport, cartloads full of unclaimed baggage are being parked on the tarmac. It's a major hub for Southwest Air, which says it will fly just a third of its usual flights for, quote, several days following the historic winter storm. And in North Dakota, an Air Force vet has been camping outside to raise awareness for people in Ukraine living without power this winter. Mark Lundquist has slept outside for a week straight,

inspired by a visit to Ukraine last April on Christmas Day. Temperatures actually sank to 20 below zero. He says it'll be worth it if he can motivate Americans to donate and help people in Ukraine. Scott, back with you. All right, Christina, appreciate that very much. Thank you. That's Christina Partsenevelis. Up next, a big global opportunity. Top technician Jonathan Krinsky is highlighting one key pocket of potential for your money, where he thinks investors should put their money to work. That's just ahead. Overtime's right back. Major averages are on track for their

worst year since 2008, with the S&P 500 having its seventh worst year on record. But according to our next guest, we haven't seen full capitulation in stocks just yet. Joining us now is Jonathan Krinsky, chief market technician at BTIG. That doesn't make me feel very good. Yeah, well, you know, Scott, we've been, you know, kind of discussing the same thing all year. You know, the primary trend remains to the downside for the major U.S. averages. And, you know, we've seen this kind of rotation. I wouldn't even call it a rotation, but obviously tech and high growth has seen the brunt of the selling. But as you were mentioning with Dan earlier, there's been

rotation into some of the energy and healthcare and industrials, and that's kind of kept the market from seeing that kind of high correlation sell-off that typically happens at the end of bear markets. What does capitulation look like? I mean, obviously, you think a lot of stuff is going to go down from a lot of different sectors, but what kind of level are the charts telling you we might reach? Well, from a just high-level sense, capitulation is when you see most stocks and sectors, you know, kind of sell off at the same time. And again, we haven't seen a lot of that this year, largely because when the market's gone down in the early part of the year, energy held up well. And again, that's expanded a little bit now. So, you know, one of the things would be,

you know, all the sectors kind of getting thrown out together. As far as broad-based levels, it's tough to give an exact level, but I think 3,000, 3,100 certainly makes some sense to us. That's the pre-COVID highs on the S&P 500. And we're just seeing more and more evidence that that's where we're headed. You know, you're also watching a level of 9,800 on the Nasdaq. Do you want to tell our viewers why that number sticks out to you? Well, if you look at the relative strength of the Nasdaq versus the S&P, that's, you know, broken down to multi-year lows, kind of back to that pre-COVID high area. And that's, you know, where we think in absolute terms the Nasdaq's probably headed as well. You know, again, you look at some of the big marquee names, which is driving the bus, obviously Tesla today,

but Apple looks pretty vulnerable to us as well. And then you're just not seeing, whereas the, whereas the broad-based market, you are seeing some, some, you know, handoff to some of the other parts of the market. Within tech, you're just not seeing anything step up, whether it's Amazon or Google or Microsoft. You know, they're not necessarily breaking down right now, but they're really not doing much. So that tells us that they probably have another leg lower, which gets you to NASDAQ 9,800. All right. So let's kick around a couple of names. You just mentioned them, Apple and Tesla, but let's do Apple first.

If you said a moment ago, and I'm looking at the stock as I'm asking you this question, you said it still looks vulnerable. It's at 130. How vulnerable? I mean, look, you know, the thing about our work primarily, we focus on trend following, which means we want to follow the trend until the trend stops working. So that's first and foremost. So but if we are looking at levels, I mean, again, you look at for some reference points, I believe pre-COVID, the pre-COVID highs in Apple, I think was around $80, if I'm not mistaken. You know, I don't know that we go there, but certainly I think something down towards 100 would kind of represent a better indication of

capitulation. What about on Tesla? It's really incredible to watch this all play out as we've discussed at the very top of our program. And here we are some 37 and a half minutes in and we're doing it again because there's been such a dramatic breakdown. What do you make of it? Yeah, I mean, Tesla is probably the closest example of getting towards that capitulation that we've seen in large cap tech. We kind of identified $100,000, $105,000. If you look at kind of a volume profile, there was a lot of volume traded at that level over the last couple of years, mainly on the upside, on the way up. So $100,000, $105,000, you just look at the price action, the volume continues to accelerate.

On the downside today, I think it was the second continues to accelerate on the downside rate today. I think it was the second highest volume day of the year. So, you know, that's kind of more of an example where volume picks up as price goes down. And by the way, the moves, the percentage moves get bigger as the sell-off, you know, continues. So we're seeing that in Tesla. But I think $100, $105, and we'll probably see that this week, would represent an area that maybe we could see some stabilization. Yeah, on our way there rather quickly, too. Jonathan, thank you. I appreciate your time.

That's Jonathan Krinsky, BTIG, joining us. Coming up, we're trading the tech tumble. Some of the sector's biggest names feeling serious pain, as Jonathan was just talking about. So how much more downside do the traders think is ahead? Could we see a bounce in the FAANG stocks? We'll debate that in today's Halftime Overtime. And don't miss the CNBC special report, Taking Stock 2023, drilling down on the energy space, 6 o'clock Eastern tonight, Overtime, back after this. In today's Halftime Overtime, big tech's bad year. A number of the mega cap heavyweights having their worst years since at least 2008.

As interest rates continue to rise, but requisite capitals Bryn Talkington believes the group could still have further downside ahead. The Q's in February of 2020 were at 234. so if you look at just a simple 200 moving average it's not crazy to think that we have to retrace back to that february of 2020 level pre-covered until we finally start to stabilize so it may not happen but if you look at a chart that's really the next stop for the Q's in general. Shannon Sikosha of SVB Private joins us now. A lot of people are talking about, you know, pre-COVID levels for almost everything. You heard Bryn there. I hope you heard our conversation with Jonathan Krinsky, who had a rather ominous number in his mind, or at least in the charts, for the Nasdaq, too. Yeah, I think that these are concerns that are somewhat warranted, given the fact that I think that we're continuing to see some compression,

particularly in the multiple for long duration stocks. But some of these stocks, if you look at the Q's, for instance, the top 10, Scott, Nvidia, Tesla, Microsoft, Google, they're all down well more than the market. And so to go back and retrace to February, I mean, we're talking another 20 percent down for some of these names. They could get it because I think there are some company specific concerns. And you were talking about that with Jonathan in the earlier segment. But it seems it seems difficult for me to to grapple with the fact that all of these names are going to be down another 25, 30 percent from here, especially these ones that are off, you know, well over 70 percent. I know, but therein lies the rub on the overall market, right? It's hard to get your arms around the idea that we could go to a dark place. And some of these

names that are tried and true and have, you know, led us to the promised land could go to a dark place, too. But what what is that promised land? We're we're we're oscillating right now, Scott, between the Fed continuing to be aggressive or we're entering into a recession where the Fed isn't going to be as aggressive. And if we're going into that, whether it's a contraction or a true recession in the back half of next year into 2024, we're going to have to go back to quality balance sheets, free cash flow. I'm not necessarily saying tech, but looking at it in terms of what do you have that is defensible in that environment, that's going to be critical. And I think that at some point, some of these quality names, you're going to start to see that

transition. I'm not going to say it's timing it it the middle of next year, but the bottom line is that you have to go back to companies that can generate their own growth on the top and bottom line. And some of these names, maybe not all of them, but some of these in the back half of next year are going to become a lot more attractive as we enter into this late stage cycle. See, those two scenarios, which you painted at the top of your answer, sound both bad to me for for tech and to the to the notion that the word defensive. Well, you will be fishy. Use the word defensible, which which I think is interesting in and of itself, because these stocks in many ways were viewed as defensive plays in times of market upset, not even like to the degree that we've witnessed, but even in simple upset in the market, people went to these stocks because they were

viewed as defensive plays. Yes, they were in a still zero or very, very low rate environment. Now the goalposts have completely changed. So what makes us think that they will be looked at that again? Well, not all of them will be. And I think that's will be looked at that again? Well, not all of them will be. And I think that's an important point. If you're looking solely at future cash flows without profitability, those are the companies that did really well in 2020. And those are not as defensible today. But I think if you're thinking about businesses like Azure that are still going to grow, maybe not 35%, but maybe 25%, Scott, in a recessionary environment. Doesn't that seem a lot more attractive than buying cyclical

businesses such as consumer staples that are going to have margin compression, oh, and perhaps a weaker consumer? I don't know. I think that the tech is dead narrative is probably in place for the next couple of quarters, but I do think that there are parts of the cues, parts of technology, parts of maybe not so much communication services that will have light at the end of this tunnel. All right, we'll leave it there. Shannon, thank you as always. That's Shannon Sikosha joining us here in Overtime. Coming up, coming up, we are tracking some big stock moves in overtime.

Christina Partsenevelos is standing by with that. Christina. Intel buying a large stake in a software firm and an oil giant completing a large acquisition. I'll obviously have all the details after this short break. Very short. All right, we're tracking the biggest movers in overtime. Christina Partsenevelos is back with that. Christina? Someone's doing some shopping. Shares of Intel moving higher after a new filing revealed a 9.4% passive stake in MariaDB. You can see shares are just barely up, but they were higher before. MariaDB is an open source software firm.

Southwest Airlines cancellation is still a major story, even in the overtime right now. The federal government plans to investigate why Southwest canceled thousands of flights in the aftermath of a massive winter storm, while other airlines' schedules fared much better. Stock down two-tenths of a percent right now. And then last but not least, some news now. Marathon Oil shares lower as the petroleum refiner completes its acquisition of key assets in the shale-rich region of Texas known as Eagle Ford. That acquisition was originally announced in November. Shares down almost four-tenths of a percent. Back over to you. All right. Thank you very much,

Christina Partzanoblo. Still ahead, betting on a 2023 bounce. Why one money manager thinks stocks could see some serious strength despite those headwinds we've talked about for the last 50 plus minutes. She'll explain coming up. Take a look at how the Drudge Report is talking about Tesla right now. That's the home page. The bonfire of the Tesla is the stock down 72 percent for the year. It's on pace for its worst month and year on record. By the way, it's the last call to weigh in on our Twitter question all about Tesla.

Will the stock see a comeback next year? You can head to at CNBC Overtime Vote. We'll bring you the results coming up. Plus, one money manager is breaking down how she thinks Tesla could stage a turnaround in 2023. That's all coming up next. Welcome back to Overtime. Let's get the results of our Twitter question. We asked, will Tesla see a comeback next year? Close. 53% saying yes, 47% saying no. Interesting. See how that finishes the year, too, on pace for its worst month and

year on record. Our next guest says stocks can have a better 2023 even if earnings decline. Nicole Webb of Wealth Enhancement Group joins me now. Well, you're in the minority, it feels like nowadays because it seems like everybody's negative. How do you have a different perspective? I refuse to kind of call this recession into fruition. I actually do. It's not to say that 2023 won't be without the challenges. We know the challenges ahead. But the jobs market, the labor market, the jobs are plentiful and the consumer remains pretty resilient and many of them have received raises. So coupling that with goods price prices coming down, I just don't see this ominous cloud lingering over our heads. Yeah. Do you think tech can stage a rebound? It seems to be the area with

the most amount of negativity around it. I think that's pretty clear. Yeah, I think technology, when it does rebound, will rebound quickly on the duration component. So when we inevitably start to price in more aggressively, a real easing, so going out beyond the pause, there's certainly opportunity there. But I think that's a bit into the future, probably closer 2024 in terms of that rotation back to technology. Pretty interesting, your view on energy as well, the best sector by far. I mean, it's the only one that's positive and by a lot. You're not chasing here. There are some who think that these gains are going to continue.

Why don't you? I think that we're going to see an evening out. So when you think about kind of the reopening of China and the intersection there of the global oil consumption landscape, you start to see energy prices coming down in Europe. You know, we're just not chasing those prices into the new year. We don't think that they are sustainable. It's just we think that that's going to even itself out from just an overall landscape perspective, probably in the first quarter of next year. How about the airlines? Southwest, Delta, two stocks on your list. Why do you like them? Yeah, you know, I like this. I like the conversations you've been having about technology today and kind of this.

Well, don't we need to get back to where we were pre-COVID? And I love the airlines because they're trading where they were. So Southwest today trading where it was in the early onset of COVID. Delta, a strong company, you know, trading where it was before we had broad vaccination. So when we look at, you know, the strength of that sector over the long term and where it's trading now, it looks like an immense opportunity. All right. It's been great having you. Thank you so much, Nicole. We'll see you soon. Keep our eye on Tesla, too, as we head into a new day again on pace for its worst month,

worst year ever. New low yet again today. And the conversation certainly swirling around that stock. I'll see you tomorrow. Have a great night. Fast money begins right now.