Shares of Tesla Inc (NASDAQ: TSLA) opened about 4.0% down on Tuesday after CEO Elon Musk said the leading U.S. electric car manufacturer hadn’t signed a formal contract with Hertz.
Tesla shares are up 30% in just over a week
Musk’s comment was in response to an about 30% gain in TSLA in just over a week. In his tweet, he said:
If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet. Tesla has far more demand than production, therefore, we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics.
The stock had started climbing last week after the car rental giant said it had placed an order for 100,000 EVs that it wanted Tesla to deliver by the end of 2022.
Cramer’s remarks on the sell-off
According to Jim Cramer, however, it’s a mistake to sell Tesla shares on the dip. Responding to the price action on CNBC’s “Squawk on the Street”, he said:
I think it’s a mistake to sell because what’s going to happen is retail. Retail investors are driven a lot by ESG. They want to make a statement, so they’d buy something that cleans the environment. The retail investor is very morals and ethics oriented; quite different from what we’re used to.
Tesla shares weren’t under pressure even after reporting lower-than-expected revenue for the fiscal third quarter on October 20th. The company blamed the ongoing global chip shortage for the hit to its revenue.
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