Tesla Stock Crashes 12% But Jim Cramer Remains Bullish On EV Giant

by

As a long-term crypto investor with a keen interest in the stock market and Tesla in particular, I have witnessed Jim Cramer’s influence over the market for years. His bullish stance on Tesla, despite the recent disappointing Q2 earnings report, is nothing new. However, his comments come at a time when the so-called “Inverse Cramer Effect” is gaining traction.

Tesla’s share price dropped by around 12% on July 24 due to underwhelming Q2 earnings results. Nevertheless, Jim Cramer from CNBC maintains a positive outlook regarding Tesla’s future in the electric vehicle market. However, his recent comments may trigger the “reverse Cramer effect,” potentially impacting TSLA’s stock negatively.

Jim Cramer Long On Tesla Stock

During the volatile earnings season, Jim Cramer voiced his optimistic view on Tesla and Elon Musk through social media platform X (previously known as Twitter). He referenced Tesla Energy’s announcement of deploying 9.4 GWh in battery storage during Q2. Cramer emphasized, “This chart serves as a compelling argument for why one should consider investing in Tesla for the long term. It’s essential to tune in to last night’s excellent call!”

Additionally, Cramer made remarks regarding the widespread market decline and Tesla’s role in it. He remarked, “This sell-off seems to be operating independently… There were no issues with Google, and Tesla boasts numerous advantages that are currently disregarded but will prove significant in the long term.” Furthermore, he expressed skepticism towards the trend of investors moving their funds from large-cap tech companies, such as Tesla, to small-caps. He denounced it as a “baseless self-reinforcing myth.”

Jim Cramer’s endorsements hold substantial weight, yet his positive outlook on Tesla stock emerges amidst the “Inverse Cramer Impact.” This term denotes the occurrence where stocks favored by Cramer may underperform following his recommendation. Regardless, Cramer’s clout stays strong, especially among individual investors.

Cramer strongly endorsed Tesla’s long-term prospects based on its solid fundamentals. He also emphasized the significance of Tesla’s innovations in energy storage, such as Powerwall and Megapack, which he viewed as promising catalysts for future expansion. Expressing his skepticism towards sellers, Cramer stated, “It’s surprising if those who sold Google or Tesela yesterday even bothered listening to their conference calls, as it’s clear these companies are thriving.”

EV Giant’s Q2 Earnings Disappointment

In the second quarter of this year, the electric vehicle company based in Austin, Texas saw a significant decrease in net income, amounting to 45% less than during the same period last year. Global sales of electric vehicles faced challenges despite price reductions and favorable financing deals. Tesla reported earnings of $1.48 billion between April and June, which is a noticeable drop from the $2.7 billion earned in Q2 of the previous year. This signifies the second consecutive quarter in which Tesla experienced a decline in net income.

Despite a 2% increase in quarterly revenue to reach $25.5 billion, which was slightly higher than the projected $24.54 billion by analysts, the company’s earnings per share (EPS), excluding exceptional items, were reported as $0.52. This figure missed the anticipated mark of $0.61 set by analysts.

The dismal earnings release initiated a wave of selling, resulting in Tesla’s stock decreasing by approximately 8% during extended trading sessions on Tuesday. Moreover, the TSLA shares fell drastically by 11.62%, reaching $217.75, as of Wednesday, July 24th. This downward trend suggests that the “Inverse Cramer Effect” could potentially be at play.

The market responded sharply and negatively to Tesla’s earnings release. This reaction alarmed investors not only due to the missed earnings targets but also because of the persistent difficulties in increasing vehicle sales. Before the earnings announcement, Ark Invest, led by Cathie Wood, disposed of $3.73 million in Tesla shares, indicating a bearish outlook.

Read More

2024-07-24 18:44