Cramer’s Mad Money Recap: Square, Robinhood, PayPal
What’s the best way to make money in the stock market? Find out what millennials want and give it to them, Jim Cramer told his Mad Money viewers Monday. Services like “buy now, pay later” are red-hot with millennials, and that’s why Square’s (SQ) – Get Report acquisition of an Australian payments rival was so well received.
Square said that “buy now, pay later” represents a huge opportunity for the company, as deferred payments still only account for 2% of total online sales. While shares initially dipped on the news, they closed up a stunning 10.1% by the close.
Cramer called this acquisition “brilliant,” noting the analysts love the deal as well. Millennials are eschewing traditional banks, credit cards and brokerages that cater to the rich in favor of services like Square and Robinhood (HOOD) – Get Report, that cater to less wealthy clientele with less-than-perfect credit. He said Square, PayPal (PYPL) – Get Report, Affirm (AFRM) – Get Report and Robinhood can all be bought, especially Robinhood, which could make a similar acquisition of its own.
Over on Real Money, Cramer says the truth is, “you can’t get at these people the way traditional marketers work, because many of the customers of these companies simply hate anything traditional in the financial space.” Read his Real Money column for more investment insights and trading ideas.
Beyond finance, there are a lot of products and services catering to millennials. Cramer said he remains a fan of Roku (ROKU) – Get Report, Chipotle Mexican Grill (CMG) – Get Report and DoorDash (DASH) – Get Report, just to name a few.
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A Second Look at Social Media Earnings
When Twitter (TWTR) – Get Report and Snap (SNAP) – Get Report reported earnings last week, shares soared. But when Facebook (FB) – Get Report and Pinterest (PINS) – Get Report released their earnings, things got confusing. Now that all of the social media results are in, Cramer told viewers it’s time to take a second look at the group.
After years of stumbling, Snap has found its groove, delivering 116% sales growth and a 10-cents-a-share earnings beat. Cramer said Snap told an amazing story and has more room to run.
Twitter also reported strong earnings that included a 13-cents-a-share earnings beat. But as impressive as numbers were, Cramer said Wall Street just wasn’t impressed.
Then there’s Facebook, which saw 100% earnings growth, but gave investors cautious guidance that noted decelerating growth and headwinds ahead. Cramer said Facebook is a steal at just 22 times earnings.
Finally, Cramer said Pinterest was the toughest quarter to evaluate. The company’s active user count shrank, and it is also seeing engagement headwinds post-pandemic. Cramer put Pinterest in the penalty box and said it shouldn’t be bought until further notice.
Off the Charts
In the “Off The Charts” segment, Cramer checked in with colleague Larry Williams to learn where the market is likely to head next.
Williams was bearish on stocks, noting the strong bearish seasonal pattern in August. He also noted that the S&P 500’s advance-decline line and on-balance volume painted a disturbing picture. With each recent rally, the breadth of that rally has been shrinking. This is not a healthy trend.
Williams was long gold, however, saying that not only is August a terrific time to own gold, the precious metal is currently undervalued.
Executive Decision: Newell Brands
In his first “Executive Decision” segment, Cramer spoke with Ravi Saligram, president and CEO of Newell Brands (NWL) – Get Report, the family of household brands with shares that are up 52% over the past year.
Saligram said that Newell has all the brands people have been seeking out during the pandemic. They have everything for the home, from Yankee Candles to Calphalon and Mr.Coffee in the kitchen and Coleman for your outdoor adventures.
Newell has been hit with cost inflation, especially in shipping, Saligram noted, however much of that inflation he expects to be transitory as the economy reopens and rebalances for changing consumer needs.
Saligram assured Cramer that items like Ball jars will be easier to find going forward as they ramp up production to meet the growing demands for canning and home storage.
Steer Clear of Chinese Stocks
In his “No Huddle Offense” segment, Cramer warned investors to steer clear of Chinese stocks, saying he’s deeply skeptical after the Chinese government’s recent pro-communist actions.
Cramer said you’re fooling yourself if you think China’s actions against Didi Global (DIDI) – Get Report and its private tutoring industry are isolated events. The free-market China no longer exists, he said, and there will be more crackdowns aheads.
The problem with China is that we have no idea which industries or companies they’re likely to hit next, Cramer warned. And with the Chinese economy slowing, there are many factors at work. So while some money managers are willing to dive back into Alibaba ((BA)(BA)) – Get Report and Baidu (BIDU) – Get Report, Cramer said he’s taking a pass.
Here’s what Jim Cramer had to say about some of the stocks that callers offered up during the “Mad Money Lightning Round” Monday evening:
New York Community Bancorp (NYCB) – Get Report: “It has a good dividend but no growth. I prefer growth over dividends.”
Coupang (CPNG) – Get Report: “I like the company but it is speculative.”
Spirit Airlines (SAVE) – Get Report: “It’s not a high-quality operator. I want to steer clear of this group other than Southwest Airlines (LUV) – Get Report.”
Energy Transfer (ET) – Get Report: “I don’t like the MLPs. I say take some profits and sell it.”
Plug Power (PLUG) – Get Report: “They report soon and they have to deliver. They’ve let us down the last few times.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position in FB.