Cramer says 'Elon Musk ended the magic,' making Tesla sound like a regular car company

Published Tue, Jul 27 202110:48 AM EDTUpdated Tue, Jul 27 20215:43 PM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

CNBC's Jim Cramer had lukewarm feelings Tuesday on Tesla 's second-quarter earnings call from a day earlier, saying the electric vehicle maker's CEO, Elon Musk , seemingly "ended the magic." Shares of Tesla rose about 1% in premarket trading as Cramer spoke on "Squawk on the Street." The stock closed down 1.95% at $644.78 per share as Wall Street digested Tesla's better-than-expected earnings of $1.45 per share. Revenue of $11.96 billion also topped forecasts. "Elon Musk ended the magic yesterday. He sounded like another car company, just another car company making a few more cars," Cramer said. "The reason why I'm saying these things is because, you see, the stock is up $6," Cramer said, referring to the premarket move. "It's not up $60. It's not up $600. In the old days, if he talked about the magic, it would be ... [up] $60. Instead, he's talking about earnings and being hurt a little bit by chip shortage," Cramer said, adding, "Manufacturing is hard." Tesla's market value sat north of $600 billion Tuesday morning, by far the largest of any automaker in the world. Ford, for comparison, is valued at roughly $54 billion, while General Motors has a market cap of about $79 billion. Both Ford and GM sell significantly more vehicles than Tesla. However, stocks are forward-looking assets and their prices are based on projections of future cash flows and other financial metrics. In Tesla's case, investors have lofty expectations for the company, which are reflected in its valuation, as sales of electric vehicles increase around the world. Tesla has been a leader in the category for years, and some also have argued that the company should be viewed as more a technology play rather than traditional automaker. "I come back to the idea that you never want Tesla to be another car company, because then the magic is lost," Cramer said Tuesday. A year ago, Cramer praised Musk as "a big thinker" who "makes us look like Lilliputians," adding "this man is selling technology." Cramer first became bullish on Tesla in late 2019 . In a CNBC interview earlier this month, for example, Morgan Stanley auto analyst Adam Jonas explained that central to his $900 price target for Tesla was potential high-margin software revenue, not just vehicle sales . Investors generally place a greater multiple on recurring software revenue than for car sales. "Tesla is still covered by auto analysts that probably shouldn't be covering it, and when you let the tech community get ahold and see the software opportunity, that's what I'm channeling," Jonas said July 8. "Yes, the units are important, but you don't need to have half the Chinese market to get the software revenue." In Cramer's view, Tesla's earnings call was a pretty run-of-the-mill affair compared with previous quarters as Musk and management discussed the impacts of the semiconductor crunch that's hampered the global auto industry. Also covered on the call was Tesla's progress on new factories in Germany and Texas. "In the end, targets were raised. People liked [the quarter]. They're making a lot of cars and would've made — and I think this is kind of the takeaway — would've been able to sell a lot more cars if they had more availability," the " Mad Money " host said. "What I didn't like about it is, that's what all the car companies are going to say. There was no wizardry to the quarter," Cramer added. During the call, Musk also said he likely won't appear on future earnings calls unless he has "something really important" to communicate.

Tesla CEO Elon Musk attends an opening ceremony for Tesla China-made Model Y program in Shanghai, east China, Jan. 7, 2020.

Ding Ting | Xinhua News Agency | Getty Images

CNBC's Jim Cramer had lukewarm feelings Tuesday on Tesla's second-quarter earnings call from a day earlier, saying the electric vehicle maker's CEO, Elon Musk, seemingly "ended the magic."