Benzinga - by Shanthi Rexaline, Benzinga Editor.
Tesla, Inc. (NASDAQ:TSLA) shares skyrocketed on Wednesday despite a double miss, and CNBC Mad Money host Jim Cramer did not take kindly to the fact.
What Happened: “Tesla and Boeing Co. (NYSE:BA) horrendous cash flow figures and people love them,” Cramer said in a post on X, formerly Twitter.
“Everything that is happening this morning smacks of fiction not fact and no one cares!!!!!!” he added.
Tesla and Boeing horrendous cash flow figures and people love them. Everything that is happening this morning smacks of fiction not fact and no one cares!!!!!!— Jim Cramer (@jimcramer) April 24, 2024
Boeing, which reported ahead of the market open, said its free cash flow for the quarter was a negative $3.93 million, sharply lower than the negative $786 million in the year-ago quarter. Incidentally, Boeing shares climbed moderately, as traders focused on the company clearing the lowered bar on main metrics.
Boeing’s fundamentals have also suffered recently amid safety concerns surrounding its airplanes and difficult production ramp-up.
Why It’s Important: Both Boeing and Tesla are operating in capital-intensive industries that require heavy investment. Positive cash flow indicates that a business has enough money in its coffers to plow back into the business for running its day-to-day operations and investing in future growth. A negative free cash flow, on the other hand, is a red flag for a business as it could stymie its ability to compete efficiently.
For Tesla, the problems run deeper than the free cash flow issue. EV adoption has slowed amid a fluid economic environment, and against the backdrop, a lack of low-end models is hurting the company. The strong post-earnings stock reaction is based on the optimism that the company would launch a low-end model sooner than expected.
Meanwhile, during the Q1 earnings call, Elon Musk emphasized that the company should be recognized as an AI or robotics company rather than just an auto company. “If you value Tesla as just an auto company, you’re fundamentally using the wrong framework and that will become evident,” he said.
Price Action: Tesla rose 14.42% to $165.54 at last check and Boeing added 1.06% to $170.98, according to Benzinga Pro data.
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