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Cramer Wowed by Tesla Test Drive

(Click for video linked to a searchable transcript of this Mad Money segment)

After taking a Tesla for a test drive, Jim Cramer is a believer. "All I can say is "wow," I want one. It is that terrific. It was the best, most quiet and most powerful ride I ever had."

Whenever he's enthusiastic about a product, Cramer thinks the stock always deserves a look.

"All my investing life I have believed that if you like a product, or a store, or an experience, and the company that creates the product, runs the store or creates the experience is a public company, that's a candidate to be bought for your portfolio," Cramer said.

Seems like an easy decision. Except it's not.

"All my life I have also felt that valuation matters and when I have lost my discipline I have lost money on almost every single stock," Cramer added.

Telsa's valuations are sky-high.

The market cap is nearly 12 billion yet when the company reported earnings earlier in May, it reported first-quarter earnings of $15 million or 12 cents a share and revenue of $500 million.

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Therefore, Cramer believes before you put money to work in Tesla – you need to ask yourself a few questions:

- Do you think Tesla is the next Amazon? That is, does Tesla deserve a huge valuation because of it growth potential?

- Do you think Tesla CEO Elon Musk is the next Henry Ford? Is this CEO an innovator who is about to transform the auto industry?

How you answer these questions should inform your investment decision.

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That is, if you feel that Tesla is at the infancy of something big than Cramer thinks the valuations could make sense. However if you feel that Tesla is just the latest cult stock then he doesn't think it has any business being above $100.

"Enjoy the car, buy one even," Cramer said, but the stock itself? That's up to you."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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