This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cramer: 3 Things Needed to Kill a Cult

I think that Tesla's loved from afar, but not Netflix. In a week, Breaking Bad starts its last season. I heard Vince Gilligan, its amazing creator, speak on another network about why his show is a success. He said it was simple: "Netflix." Before Netflix it was impossible to get into a new drama. Not anymore. That, more than original content, drives people to Netflix.

Amazon's so loved it's obvious. Amazon Prime is like Costco ( COST), a membership, and it gives you automatic two day shipping, something that's getting cheaper and cheaper for Amazon to do with the addition of all-new warehouses. That cuts the vig to United Parcel (UPS) and is a huge win for both the customers and the cult.

So, the unstoppability of all three is extraordinary.

Second, you need to see insider selling of the massive variety. To sustain the cult you need the managers of it to believe, too. When they sell you are in greater-fool territory. We just haven't seen that happen. It's something that I think a lot of the analysts thought would happen, particularly with Tesla, but it hasn't occurred.

Third, we need to see financing dry up. Unless a company's about to be shot and left for dead these days, there is financing, and that's the case for all three of these. Tesla could easily get a state loan to build a plant. We heard from CBS (CBS) on its call how much it needs Netflix and will pay. Amazon could issue $3 billion in bonds of different tranches and I think they would all be lapped up.

Now, here's the tricky part. You need all three of these to occur. Any one of them won't kill the cult. Without them you could see ridiculous price targets be set: "Tesla goes to $400!" And who is going to argue with that, especially in an up tape?

Now when Tesla started its remarkable run there were tons of bears out there, many of whom believed that the fated last conference call, which was a total game changer, was a total fraud. But ask Bill Ackman about total frauds. Until you get the Securities and Exchange Commission involved, those calling fraud don't have a leg to stand on. And given that these are all cults, valuation means nothing.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 16,014.38 -12.67 -0.08%
S&P 500 1,852.21 -1.23 -0.07%
NASDAQ 4,268.7630 -14.99 -0.35%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs