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Jim Cramer: Expect Tesla's stock to fall hard on an earnings miss

Key Points
  • High expectations surround Tesla ahead of its quarterly earnings report, CNBC's Jim Cramer said Tuesday.
  • And the stock could fall hard if the electric-vehicle maker misses expectations, the "Mad Money" host said.
  • "Now the company needs to keep delivering amazing results or else its stock will run out of juice," he said.
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If Tesla fails to meet expectations, the stock could sell off hard: Cramer

High expectations surround Tesla ahead of its quarterly earnings report, and the electric-vehicle maker has to come through, CNBC's Jim Cramer said Tuesday.

"If Tesla stumbles, the stock will sell off hard, but I believe my buddy-pal-friend Elon Musk will deliver," the "Mad Money" host said, referring to its CEO.

Tesla is scheduled to report quarterly results after the bell Wednesday, so "we'll know soon enough" if Wall Street's high hopes were met, Cramer said. Analysts are projecting Tesla will report quarterly earnings of $0.57 per share.

Shares of Tesla have been on a tear lately, rising more than 100% in the last three months.

The stock closed Tuesday's session at $566.90, rising 1.59% for the day. It reached its all-time high of $594.50 on Jan. 22.

Investors have been swooning for Tesla since it delivered a surprise profit in October. The Palo Alto, California-based company also impressed Wall Street — Cramer included — with its manufacturing plant in Shanghai, China, which was built in 10 months.

Cramer said Tesla's stock had seemingly been stuck in a rut, with critics continuing to doubt Musk's ability to deliver.

"But those skeptics have turned into believers practically overnight," said Cramer, who became a Tesla bull at the end of last year. He said he was a "true believer" in Tesla in December.

Many doubters began to change their mind because Tesla demonstrated it was capable of turning a profit, Cramer said.

"Tesla's spectacular performance has silenced its critics, and the results have been fabulous for the shareholders," Cramer said.

Tesla's growth prospects had always been attractive to certain investors, he explained. That's why its market capitalization of more than $100 billion is larger than Ford's and GM's combined despite the two legacy automakers doing more in sales.

"Investors pay up for growth; nobody's paying up for stagnation," Cramer said.

Tesla's "stunning trajectory" has led to analysts expecting the company to earn $6 per share this year and around $13 next year, according to Cramer.

"Last year when the skeptics held sway, Tesla could rally on any good news," Cramer said. "Now the company needs to keep delivering amazing results or else its stock will run out of juice."

VIDEO8:3408:34
Cramer: Tesla's stock may sell off hard if it fails to meet earnings expectations

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