CNBC’s Jim Cramer said Tuesday that young investors believe Tesla CEO Elon Musk has big visions for the electric vehicle maker that make it comparable to late Apple co-founder Steve Jobs. So they stand ready to keep buying Tesla’s stock to fuel the dizzying run this year, added Cramer.
The remarks followed news of Tesla’s plan to raise a stock offering of up to $ 5 billion for the second time in about three months. While the stock was down about 2% on Tuesday, Cramer said Tesla’s capital increase may speak to what young investors like about Musk.
“It is entirely possible that they will use it for things that we don’t know he planned. That’s the size of this man,” Cramer said on Squawk on the Street. “So this younger generation is willing to give him money. They say, ‘Look. He’s Steve Jobs. Who knows what he’s going to come up with next. I want a part of it.'”
Tesla’s decision to raise funds also makes sense when judging the company’s well-known endeavors like the factory in Germany and the electric pickup known as the Cybertruck, Cramer said. “I think you will need every penny to have the best cars in the world,” he said. “Doing the pickup … is going to cost a lot of money. You have some very serious companies when it comes to pickups and that’s where the money is.”
Tesla’s shares have soared to high levels this year, rising well over 600% to a number of record highs. The company was also included in the S&P 500 this fall, after posting its fourth consecutive quarter of earnings in July. Tesla will be added to the US benchmark index ahead of December 21st opening.
Elon Musk, CEO of Tesla, will be on the construction site of the Tesla Gigafactory in Grünheide near Berlin on September 3, 2020.
Patrick Pleul | Image Alliance | Getty Images
Cramer, who had been critical of Musk and Tesla, began to rate the company positively late last year. The “Mad Money” host declared on December 11, 2019 that it was a “true believer”. Since the close of trading that day, Tesla stock is up nearly 800%.
Cramer has also touted Tesla’s work on solar panels, claiming his business’s growth potential in this category is underestimated. “He started this whole solar and energy thing that we don’t talk about enough,” Cramer said of Musk on July 23rd. Musk also acts as the executive director of SpaceX.
While some people were puzzled by Tesla’s amazing rise, Cramer said Tuesday that the trust of younger investors in Musk should be respected. “Who should we criticize … their amazement? Who should we criticize their belief in this man?” he said.