Jim Cramer Axes Tesla From The 'Magnificent 7': Now He Says There's A Way The EV Maker Can Get Back In

Jim Cramer said earlier this week that Tesla Inc (NASDAQ:TSLA) should be removed from the “Magnificent Seven.” But now he sees a path back into the index for the EV maker.

What Happened: The so-called "Magnificent Seven" is a group of seven popular mega-cap tech stocks that have historically outperformed broader markets.

The group of tech giants includes Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Nvidia and Tesla. Earlier this week, Cramer suggested Tesla should be removed from the index given its recent underperformance.

Tesla shares have been stuck in a longer-term downtrend since the end of 2021 and the stock has already given up a quarter of its value since the start of the year. The selloff in Tesla shares stems from broader EV industry concerns, but weakness intensified this week after the EV maker reported a second straight quarter of disappointing results.

Tesla also warned of “notably lower” vehicle volume growth in 2024 as it focuses on Cybertruck development. New reports suggest the EV maker is planning a new mass-market EV and Cramer believed that’s what the company should be focused on.

“The next iteration could put them back in the seven,” Cramer said Thursday on CNBC’s “Squawk On The Street.”

According to a Reuters report, Tesla began telling suppliers it aims to start production of a new mass-market EV codenamed “Redwood” in 2025.

The vehicle will reportedly be a compact crossover and could have a starting price as low as $25,000 if it’s the same entry-level vehicle that has long been expected from the EV maker. Currently, Tesla’s cheapest vehicle is the Model 3 with a starting price of $38,990 in the U.S.

Cramer noted he was a little set back by some of the language CEO Elon Musk used on the conference call late Wednesday, including his “daunting” warning about Chinese automakers demolishing the competition. Although he’s not writing off Musk, he said Tesla is definitely out of the “Magnificent Seven” at least for the near term.

Cramer suggested that Eli Lilly And Co could be the next name to join the mega-cap index, but he’s not giving up on Tesla long term.

The “Mad Money” host highlighted a note from longtime Tesla bull Dan Ives, calling the conference call a “train wreck.” Cramer argued that it wasn’t as bad as some are making it out to be.

“I don’t want to be too glib here,” Cramer said.

Read Next: Tesla Analysts Cut Projections After Q4 Results: Stock ‘Egregiously Overvalued,’ ‘Difficult To Get Optimistic’

TSLA Price Action: Tesla shares were down 12.51% at $181.90 at the time of publication Thursday, according to Benzinga Pro. The stock’s 52-week high is $299.29, 52-week low is $152.37.

Photo: Courtesy of Scott Beale on Flickr.