EV stocks have been rallying in recent weeks like there’s no tomorrow. Rivian – an Amazon-backed electric vehicle manufacturer that went public only last week, is already valued more than the legacy Detroit automakers.
But Jim Cramer sent out a reality check this morning saying the euphoria around EV stocks reminded him a lot of the dot-com bubble.
Cramer’s suggestion for the EV investors
The Mad Money host agreed it wasn’t wrong to search for the next Tesla, but said investors of the EV space should play it smart.
Let’s be practical. If you’re a Lucid or Rivian investor and you’ve made a ton of money, I suggest you take half off the table and let the rest ride. Remember, you’re playing momentum, not car companies and not technology. In that case, it’s better to ring the register early and often.
Cramer quoted Cisco as an example, the world’s most valuable company in the late 1990s with $400 billion in market cap. And then came the dot-com bubble burst. Twenty years later, and the IT company is still nowhere near that valuation again.
Timing makes all the difference
According to Cramer, a transition to electric vehicles could take another few decades, yet the EV investors are not factoring “timing” into their bets.
Dot-com bulls were right about the future. But they were way too optimistic about the timing. So, remember the lessons of the dot-com bubble in 1999. There were many stocks that made you money, but with the exception of Amazon, you got killed if you didn’t quickly ring the register.
Cramer sees Ford Motor as a more reliable means of increasing exposure to the EV sector. On top of plans of buildings its own electric vehicles, Ford also has an about 12% stake in Rivian Automotive.
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