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CNBC's Jim Cramer is a goose that keeps laying golden eggs. We have been noting with interest the phenomenal alpha-generating track record of Cramer's recommendations, provided that investors do the exact opposite of what the CNBC host preaches from his financial pulpit. Well, in a development that does not bode well for the recent scorching rally in Tesla shares, Cramer just went full-tilt bullish on the stock.
We've provided our readers plenty of instances when Cramer's recommendations marked with uncanny precision the local top or the bottom of an asset's price. Consider the fact that Cramer had endorsed Netflix before this year's carnage, went bearish on Ethereum before the ongoing rally, and puked on Coinbase shares before they recorded gains of around 90 percent over the past few days on the back of the Blackrock deal. These are just a few examples of Jim Cramer's alpha-generating prowess. It is hardly surprising, therefore, that the retail demand for an Inverse Cramer ETF refuses to die out.
Horrible news for Elon & Tesla pic.twitter.com/ITTvtsIbsg
— Inverse Cramer ETF (Not Jim Cramer) (@CramerTracker) August 5, 2022
Akin to the soothsayers of old, Jim Cramer's recent musings on Tesla constitute a black mark against the stock's bulls. While discussing Tesla's recent shareholders' meeting, the Mad Money host had proclaimed:
"I'm all-in on Tesla CEO Elon Musk."
Readers can watch the entire video clip here:
Of course, the emerging macroeconomic environment supports our thesis that Tesla shares might struggle to add to their recent gains in the near future. Consider the fact that the recent broad-based rally in risky assets was spurred by the growing belief among investors that the Federal Reserve would soon pivot on its hawkish stance, given the slowing economy. This group-think unleashed a fierce short squeeze, which in the current position-light, liquidity-scarce environment, generated sizable gains over the past few days. This group-think, however, came crashing down on Friday when the much-anticipated NFP report showed that the US added 528,000 jobs for the month of July. Such a scorching-hot labor market is sure to keep bolstering the ongoing inflationary impulse, thereby forcing the Fed to stick to its monetary guns. This emerging paradigm creates headwinds for Tesla and the rest of the growth-focused equity sphere.
Nonetheless, readers should note that if ever there was a stock that could break the dreaded Cramer curse, it would be Tesla. As we had noted in our previous post on this topic, Tesla announced a litany of positive developments at its shareholders' meeting last Thursday. To wit, the shareholders have now approved a 3-for-1 stock split. Bear in mind that Tesla had cumulatively gained over 1,700 percent when it last announced a stock split. Consequently, the latest move is being interpreted as another attempt to juice up stock gains. Moreover, Elon Musk assured that Tesla has an available supply of 1.5 million battery units and that the company aims to reach a run rate of 2 million units per annum by the end of the year. Additionally, the Cybertruck is expected to enter volume production by mid-2023, and, by 2030, Tesla aims to produce 20 million vehicles per annum. Finally, Musk also hinted at a future share buyback program. Collectively, all of these announcements call for a rally that is driven by intrinsic factors.
In today's meeting, Elon said they hope to get to high-volume 4680 cell production by the end of this year. By high volume Elon means 5,000 packs/week.
I estimate they will achieve that in May 2023 but sooner than that would be great. pic.twitter.com/OeMxGVQAqO
— Troy Teslike (@TroyTeslike) August 5, 2022
Gary Black has summarized the upcoming bullish catalysts for Tesla shares.
$TSLA catalysts - 8/2
1/ 3:1 Stock split Aug
2/ S&P upgrades debt Aug
3/ EV credit Sept
4/ AI Day II Sept
5/ TWTR deal overhang lifts Oct
6/ TSLA buyback Oct
7/ New gigas (UK, East US) 4Q
8/ FSD beta release 4Q
9/ Cytruck launch FY’23
10/ M-$30K/Robotaxi FY’24
$1,600 PT 6-12 mo
— Gary Black (@garyblack00) August 2, 2022
According to Black, Wall Street currently estimates that Tesla would be able to deliver 7.1 million EVs in 2030, significantly below Musk's own guidance of 20 million units. Should this guidance pan out, Tesla investors can expect sizable gains in the medium term.
Why $TSLA could be a great investment for the next 8 years. Street consensus for 2030 Delivs (7.1M) and production (8.7M) far lower than Elon’s 2030 target of 20M. My 2030 est is 10.8M (60% EV adoption, TSLA 20% EV share), which translates to 2030 EPS of $125 (2030 P/E 6.9x). pic.twitter.com/CNMn8D17V6
— Gary Black (@garyblack00) August 6, 2022
Do you think Tesla would be able to evade the dreaded Cramer in the short term? Let us know your thoughts in the comments section below.