Tesla (NASDAQ:TSLA) true believer Jim Cramer was confident about TSLA stock despite reports that the EV automaker would be at risk because of the current state of U.S. and China’s trade relations. The Mad Money host strongly believes that TSLA remains a "BUY."
According to The Street, Cramer isn’t worried about U.S.-China trade relations affecting Tesla because he believes the EV automaker is immune to it. Based on Giga Shanghai and Tesla China’s operations, Cramer may be right. Just recently, Tesla China filed papers to produce the Model 3 Performance and Long Range AWD with the Ministry of Industry and Information Technology (MIIT). Based on the vehicles’ specs, Tesla’s local supply chain for Giga Shanghai has grown. As such, the current status of the U.S. and China’s trade relationship might not affect Tesla in the long run. At most, Tesla will still need to export the Model S and Model X to China from the Fremont Factory.
Since Cramer’s conversion into a Tesla true believer, it seems he has started to see the company as more than an automaker. His thoughts about Tesla were reflected in his answer to a question about the Model S reaching an EPA range above 400 miles. The Street host, Katherine Ross, had asked Cramer if Tesla’s recent achievement proved electric vehicles were “no longer a thing of the future,” but cars that “investors and consumers should invest in now.”
“Well, let’s be sure, we’re not talking about the electric car, we’re talking about Tesla. Because electric cars have not been able to do what he’s doing. Tesla is a buy. Tesla down a dollar is terrific. It’s gonna go over a thousand today probably—Oh, it went a thousand twenty one-seven the other day—Well, that was a great opportunity because Tesla has the models that people want. Tesla will sell everything that it makes, and it’s Tesla’s time,” Cramer said, answering Ross’s question.
Even though Cramer gave TSLA a BUY rating, The Street’s report gave the company a HOLD rating. While the report acknowledged Tesla’s “robust revenue growth” and “solid stock price performance,” it didn’t seem to see eye-to-eye with Cramer’s analysis of the company. For example, in the Subsector Analysis part of the report, it appears that The Street still sees Tesla as more an automaker than anything else.
“TESLA INC falls within the Manufacturing sector and the Motor Vehicle Manufacturing industry group of the North American Industry Classification System or NAICS. More precisely, a significant portion of company activities involves Automobile Manufacturing. TheStreet Quant Ratings is currently tracking 1921 companies in the Manufacturing sector that total around $16,481 billion in market capitalization as well as $9,331 billion in annual sales. The Transportation Equipment Manufacturing subsector accounts for 16.3% of those revenues,” said the report.
Cramer and The Street’s perception of Tesla have long been debated by TSLA bulls and bears. Should TSLA be considered an auto stock or a tech stock? The answer may be around the corner—now that Tesla Energy appears to have jumped back into action—and could define TSLA’s future.
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Ma. Claribelle Deveza holds zero share of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.
About the Author
Ma. Claribelle Deveza
Longtime writer and news/book editor. Writing about Tesla allows me to contribute something good to the world, while doing something I love.