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Tesla (NASDAQ: TSLA) shares rose significantly on Friday, ending the day with a $658 billion market cap as they prepare to make their S&P 500 debut on Monday, December 21. The "Mad Money" host Jim Cramer said pressure is being created by the addition of Tesla into the S&P 500 and rebalancing.
"The bigger companies are all selling off and I think that's money that will end up going to Tesla. So the artificial nature of the selloff cannot be avoided. Apple is under liquidation to put money into Tesla."
In his show yesterday, he said that Tesla has captivated an entire generation of investors who don't mind paying $650 per share. He especially stressed that Tesla is precisely a technology company.
Cramer said the evolution of Tesla stock has changed the nature of the entire stock market. We've seen many success stories, but Tesla takes the same story and hypes it. This is reflected in the love of products, stock purchases, and a legion of adoring fans. For example, Amazon and Netflix have the same growth dynamics as Tesla, but you don't see people worshiping Bezos or Hastings, but you see a lot of people who admire Elon Musk.
In some ways, Tesla is a lottery ticket that is currently being paid out, and all that had to be done was just to believe in the company's success, Cramer said. The rally was so high that it has spawned a new generation of investors looking for individual stocks rather than index funds--as index funds cannot yield such returns.
The "Mad Money" host said that he personally is a huge fan of Tesla's cars, its stock, and the man behind them. For this, investors don't need to like Elon Musk, but they must respect his ability to make money. Cramer said he is betting Tesla has more upside because Musk keeps on meeting and hitting targets. He is delighted that so many people have made so much money from these stocks, and he is thrilled that a new generation is falling in love with stock picking.
"Once the index funds finish selling everything else to make room for this $650 billion behemoth, I'm betting the Santa Claus rally resumes," Cramer said.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.