Despite its position as a "cult" stock - capable of enduring anything (according to Cramer) - the holy grail of momentum stocks is under massive pressure today. Down 9% as we write, Tesla seems to be at the center of a quadruple whammy of retail investors realizing they have become unwitting bagholders to selling institutions [2], a Baird analyst's downgrade [3], a major potential dilution event as the firm's convertible note becomes 'convertible' and investors sell to take profits on their bond's huge gains, and an additional factor which may have led to the acceleration in the sell-off in the last hour or so, has been the emergence of an unverified YouTube video which purports to show a burning Tesla, although the firm's investor relations promptly responded, via CNBC [4], saying the fire is due to the car colliding with a large metal object in the middle of the road (of which roads tend to have quite many)... and burst in flames?
Cramer warned that despite many names' approaching overbought territory, a handful of "cult" stocks should continue their rally through the rest of the year, supported by a group of dedicated buyers with high expectations. One such company is Tesla Motors, he said. "That thing is such a cult, I don't want to get in front of a cult." He also listed Netflix, Ulta Salon, Lumber Liquidators, Yelp and Tractor Supply as having similar support.