Investor's Corner
What happened to Jim Cramer’s love affair with Tesla and Elon Musk?
Jim Cramer’s love affair with Tesla and Elon Musk appears to be over, based on recent comments the long-time Mad Money host has made in the past few months. Cramer flipped from bear to bull on Tesla stock several years ago following a drive in his daughter’s Tesla, essentially becoming one of the company’s most outspoken supporters. However, Cramer has moved on from his bullish Tesla outlook.
Recently, Cramer’s overwhelming support for Tesla started to crumble after he stated that the Cybertruck would be Musk’s “first disaster.” Instead, Cramer told car buyers to look at the all-electric F-150 Lightning from Ford, the automaker’s battery-powered version of the United States’ best-selling pickup truck. The F-150 Lightning is set to begin deliveries next Spring.
While purchasing a vehicle based on aesthetics is purely up to the consumer, there is no evidence to suggest that the Cybertruck will be a disaster at all, especially in terms of interest. In fact, the Cybertruck has already accumulated over 1.2 million pre-orders. Even if 50% of those orders are unfulfilled based on pure speculation, that would still make the Cybertruck one of the most popular vehicles in the country. The most popular vehicle in the United States is the Ford F-Series, which sold 787,372 units in 2020, according to GoodCarBadCar.
Earlier today, Cramer made another bold statement regarding who he would rather put his trust in between Musk and Ford CEO Jim Farley. His choice would certainly not appease Tesla fans by any measure, as Cramer stated he would much rather have Farley than Musk.
Jim Farley is undoubtedly a credible CEO, with a proven record of success thus far. He has supported Ford’s transition to electrification, and the company’s stock price has soared since he assumed the role of CEO in October 2020. While Farley has been a supporter and crutch for Ford’s transition away from combustion engines, he is not as innovative or revolutionary as Musk, and there isn’t much of a comparison based on what the two men have done in their careers as CEOs.
In a matter of months, Cramer has gone from perhaps the biggest Elon fan and supporter to relatively no trust or enthusiasm regarding Tesla or its products. One can only ask: What’s the reason for this?
The flip on Cramer’s view was drastic and uncharacteristic of someone who has supported Tesla and been a very vocal bull for several years. Here are some of the things that Cramer has said about Tesla as recently as May 2021:
May 2021: Elon Musk states Tesla will halt Bitcoin transactions due to environmental concerns
“I don’t know why the hell he said it. I don’t know whether there was another objection besides the environmental, because the environmental [reason] doesn’t hold water. It’s been this way the whole time. But he chose to do this, and I don’t get it. But, he does a lot of things that I can’t fathom that turn out to be brilliant.”
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January 2021: Musk’s contribution to Tesla’s valuation
“If you don’t have any, you can still buy some. Don’t buy a lot, but you can certainly still buy some. The roadmap is clear, Elon, every time he talks, it’s going to be good, and I just think we all have to accept the fact that President Biden will do anything to make the EV to be the central form of transport.”
“Every time Elon opens a new market, like he is about to do with his factory in Berlin, the stock will go up again. It’s really a question of whether you believe in iterations.”
Tesla still a ‘Buy’ to Jim Cramer: ‘Everytime [Elon] talks, it’s going to be good’
September 2020: Battery Day critics just didn’t get it
“They’re [critics] just bummed that the things they hyped didn’t happen.”
“Tesla rolls out a plan to create an electric car for the masses and greeted with a yawn because Musk didn’t roll out a magic battery…That’s what happens when you let expectations get out of control.”
Tesla (TSLA) shares snatched up by ARK after Battery Day: “It’s going to be hard to catch up”
While many critics of Cramer’s simply claim he has changed his $TSLA position, or that he is supporting ICE-based automakers, there is no evidence of this yet. However, Cramer’s sudden flip on Tesla is interesting, and only he knows why he has chosen to openly ditch the efforts of the electric car company that is undoubtedly leading the charge.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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