Tesla Motors Inc (TSLA) Is A Cult Stock: Jim Cramer

Tesla stockBlomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) shares have made a partial recovery today so far after Tuesday’s nosedive on the heels of a report from Goldman Sachs Group Inc (NYSE:GS). The stock rose as much as 7 percent today after losing as much as 14 percent on Tuesday. The reason? It’s simple. As Jim Cramer of “Mad Money” said on Tuesday, Tesla is a “cult stock.”

Tesla Motors Inc (TSLA) Is A Cult Stock: Jim Cramer

Tesla exhibits signs of a cult following

Of course cult stocks are those which have a lot of investors following them even though the numbers behind the company’s stock valuation just don’t add up. Investors who put their money in cult stocks typically are interested in the potential of the company and believe that it will play in their favor, boosting the value of their investment.

Cramer doesn’t really give opinions on cult stocks, so he refrained from really saying what he thinks about Tesla Motors Inc (NASDAQ:TSLA), but it’s pretty clear what some investors think today as they add back much of the value lost by the stock on Tuesday. The EV automaker may have lost almost 20 percent of its market capitalization, but it’s going right back up.

Will Tesla fall further?

On CNBC’s “Fast Money,” analysts discussed just how quickly Tesla could fall because stocks often fall much faster than they rise. The Street’s Bret Kenwell reports that Guy Adami predicts more pain ahead for Tesla shares based on Tuesday’s action. Josh Brown also said stocks like Tesla are like “an accident waiting to happen” and that luxury automakers Mercedes and BMW are catching up to Tesla with their own EVs.

Hyperloop promises high speed travel

And then there’s the Hyperloop technology that’s being proposed by Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk. Recently it was announced that SolarCity Corp (NASDAQ:SCTY), another company he has a hand in, is testing the use of Tesla’s batteries as energy storage units for its solar panels. USA Today’s Carol Kopp highlights an explanation from a blogger who’s also a rocket scientist. Brian Dodson believes it could be a sort of “pneumatic tube for people.”

Like the electric car concept Musk took and ran with for Tesla Motors Inc (NASDAQ:TSLA), pneumatic tubes are old technology as well. However, they’ve never been used to transport people. Unfortunately we’ll have to wait until August to see what Musk has in mind for the Hyperloop.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at [email protected]

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