Jim Cramer Weighs in on IBM Earnings, Tesla Downgrade and Trade Talks

We're halfway through the week already. At the open on Wednesday, Jan. 23, the Dow was up 206.23 points. The Nasdaq was up 42.61 and the S&P 500 was up 12.56. IBM Earnings IBM is Real Money's stock of the day. IBM said adjusted earnings for the three months ending in December came in at $4.87 per share, down 5% from the same period last year but ahead of the Street consensus of $4.82 per share. Group sales were also softer than the prior period, falling 1% to $21.76 billion, but the figure topped estimates and IBM said it sees free cash flow for 2019 of around $12 billion, largely in-line with its tally over the past year, reported TheStreet's Martin Baccardax. "We see the strong bookings Red Hat recently reported as further evidence of clients' confidence in the value," IBM CFO Jim Kavanaugh told investors on a conference call late Tuesday. "Remember, the quarter ended a month after the transaction was announced. From a value perspective, in addition to the growing Red Hat business itself, we see an opportunity to lift all of IBM by selling more of our own IBM Cloud and by selling more of our analytics and AI capabilities on OpenShift across multiple platforms." Tesla's Newest Downgrade TheStreet's Tony Owusu reported on Tesla's most recent downgrade. The company's growth story is in jeopardy, according to the latest RBC note on the electric vehicle maker. The firm's analysts downgraded the stock to underperform from outperform, sending the stock down 1.8% to $293.60 in premarket trading Wednesday. The firm also cut the company's price target to $245 from $290, saying that Tesla's growth expectations are too high. "It's not that we don't believe Tesla can grow over time, our model shows solid LT growth. But the current valuation already considers overly lofty expectations," analyst Joseph Spak wrote. "The company seems to be more tactful with messaging which is a long-term positive, but means downward pressure to growth expectations - which in our view are too high to justify current levels, let alone to add to positions." Cancelled Trade Talks? Late Tuesday, it was reported that Trump administration officials turned down the opportunity to meet with two Chinese vice ministers. White House Economic Adviser Larry Kudlow denied reports of cancelled U.S.-China trade talks, but says President Trump won't "back down' on demands for structural changes. In his Real Money column Tuesday, Cramer wrote about the weakness in China and how it could benefit the U.S.-China trade talks. He then explained his thinking in Tuesday's Facebook live show, which can be found here.