Cramer On Tesla IPO (TSLA): Only Good For A Test Drive

I don’t often agree with Jim Cramer’s recommendation of when to enter or exit a position, but I think he’s spot on in regards to the Tesla IPO which begins trading next week under the ticker TSLA.  This is a company that is currently all hype and hope.  While the company has some big names behind it including “the taxpayer”, success is far from guaranteed and profits will be a good 3 years away only if the Model S sedan gets into volume production and sells to more than early adopters.

Cramer says take this IPO for a test drive only, but sell into the hype on the first day.  I couldn’t agree more.  If you picked up shares ahead of the IPO or plan to trade the morning of, sell into strength.  We could see similar action to the A123 Systems (AONE) IPO when it ran up initially during the first couple weeks then sold off hard.  It staged another rally before beginning a long down trend which it remains in. 

Tesla will begin trading on June 29th on the Nasdaq under the ticker TSLA.  Once the stock begins trading, you can get your free technical analysis using patented trade triangle technology.


5 thoughts on “Cramer On Tesla IPO (TSLA): Only Good For A Test Drive”

  1. Mr. Dwinnell,your story is correct about how to deal with the upcoming Tesla ipo. However,what bothers me is how there aren’t other options to consider for this upcoming ipo. Here are my following options:

    If you don’t like Tesla Motors for ANY reasons(financial,political,etc.),DON’T,and I repeat,DON’T buy the stock period. Why?! Never buy anything that you don’t believe in. It’s just not worth the trouble;plus,you’ll sleep better knowing your cash is in something you trust(like,gold,bonds,savings accounts,etc.)

    If you like Tesla Motors but can’t get in on the ipo price(example:your brokerage firm isn’t in on the deal,or your brokerage firm is in on the deal;but,you can’t get in because you’re not a,”high-net worth client”,etc.);then,find a publicly traded company that owns a stake in Tesla Motors like A123 Systems(AONE ticker symbol);or,a company that is a direct competitor to Tesla Motors like Fisker Automotive(through Quantum Fuel Systems Technologies-QTWW ticker smybol. They own a large stake in Fisker Automotive). After you buy the respective stock,treat it the same way,as if you owned Tesla at the ipo price…sell it before the close of trading for a nice tidy profit at the end of the day.

    Finally,it you really believe in Tesla Motors for various reasons(financial,political,etc.)keep your money on the sidelines and wait about 3 months(that’s usually when company insiders are allow to sell their shares by the SEC);then,start using the,”cost dollar averaging” method to start buying up shares of Tesla Motors,on the cheap,until they start showing a profit. Which,in this case,might be a few years.

  2. Absolutely, I agree on some of your points! It’s absolutely not a buy and hold play and if you didn’t get in ahead of public trading, upside will likely be limited. Looking for an entry months out is absolutely a better strategy.. I’d even argue that waiting a year or so would be even better. It’s a good point regarding AONE, QTWW, etc.. the rising tide (er, should I say hype) lifts all boats scenario. However, if I’m not mistaken, A123 Systems (AONE) does not own a portion of Tesla. If someone has a link to verify they do own a portion of Tesla please post it here.

  3. To quote Jim Rome,”Uh-Oh!” This is what I get for typing fast;and,with little sleep. Thank you for pointing out that error in my reply Tate.

    The following should clear this misstep:

    Mercedes owns a stake in Tesla Motors.

    Toyota owns a stake in Tesla Motors.

    A123 Systems owns a stake in Fisker Automotive.

    Well Mr.Dwinnell,this clear things up a bit. Again,thank you for pointing out my mistake. “Mister”

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