Tesla (NASDAQ:TSLA) experienced a dip on Wednesday when it dropped 17.18%, but Jim Cramer still does not believe that it’s enough of a reason to sell. The host of CNBC’s “Mad Money” went on the show Thursday morning to state that the decline in price was sure to happen eventually as it does to all stocks that carry a lot of momentum for consecutive days.
“Tesla’s reversal today is something that inevitably happens to red-hot stocks that are too heavily shorted,” Cramer said, adding that he still does not advise TSLA shareholders to start unloading their shares. He argued that the electric car maker’s rise may not be finished yet.
“Unlike so many other heavily shorted names, Tesla’s too legit to quit,” Cramer added.
Tesla has been a red-hot stock since October, growing 300% since then. On Tuesday, the stock reached $968.99 before dropping to just over $887 per share at the closing bell. On Wednesday, TSLA shares dropped over $150 and closed at $734.70 per share.
During his recent Mad Money segment, Cramer stated that he does not believe TSLA is done, despite the dip. “This is simply what happens after the sellers let some air out of the balloon, although the fact that Tesla’s still up 75% for the year tells you there’s plenty of helium left,” he added.
Cramer also was not enthused by comparisons between popular cryptocurrency Bitcoin and Tesla because Tesla is a “legitimate business” and its losses have “only just begun.” “This is a unique technology company on wheels, with incredible growth. Their product uses less energy and produces far fewer carbon emissions in a world where consumers actually care about that stuff,” he said.
“I think the stock can go lower … but I think that those comparisons are ludicrous,” Cramer states. Bitcoin had a variety of competitors that have proved they were just as versatile. This isn’t the case with Tesla.
Legacy automakers that have been around for over 100 years are having trouble keeping up with the technology and performance that Tesla electric vehicles offer consumers. Meanwhile, there are nearly 3,000 cryptocurrencies, according to Yahoo Finance, and Bitcoin is being challenged by multiple competitors in market value and capitalization. Tesla’s most legitimate competitor is arguably Rivian, but the company is yet to deliver a vehicle to consumers yet.
Ultimately, Cramer still believes the stock will rise back up to $968 and stated: “when it gets back there, I bet it keeps climbing.”
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.