← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 8/4/25
00:44:23
Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money. Mad Money Disclaimer
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- [00:00]
EY Professional
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- [00:31]
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- [01:25]
Jim Cramer
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. I like my friends. Hey man, I'm just trying to make a little money here. My job is not just to entertain, but to educate, to teach. So call me 100743 CBC tweet Meet Jim Cramer. Everybody's wringing their hands about how President Trump fired the head of the Bureau of Labor Statistics in response to that jobs report Friday. It's the kind of thing Wall street loves to worry about. But you know what? And I take my cue from the market. And the market roared Today, Dow gaining 585 points, S&P up 1.47% and Nasdaq polling 1.95%. House of Pleasure it seems we all have an opinion about the President's somewhat rash decision to be diplomatic about it. But I think that misses the real point here. See, President Trump has done everything he can to strong arm the Federal Reserve into cutting interest rates. And that labor report is the best evidence that the President is right. See, this is a w a win for the White House. Take the win, for heaven's sake. The Fed's never going to cut rates if the job market's too strong. So this newfound softness is a huge positive. Hence today's terrific rally. And there is softness. Come on. Long term interest rates have plummeted despite the federal government's enormous financing needs and supposedly inflationary tariffs. If they're inflationary, most Americans haven't seen it yet, although the most serious ones candidly haven't really hit yet either. All the more reason for the Fed to cut. But in the end Whether you love Trump or hate him, the market clearly doesn't care one whit that he fired the head of the BLS on Friday. Stocks are showing extraordinary resiliency in the face of something that was supposed to be really negative, at least according to all the articles in both the conservative liberal press. So many of the stocks that have been strong on Thursday and then got clubbed on Friday bounced right back today. Some of them stronger than when they fell. Now, some of that may be because the Fed will. Look, the Fed has to cut, maybe even before September. I mean, that's how weak the employment numbers are. But at the heart of the market's resilience as well. What do we think? The Magnificent Seven. Yeah, I know, I know. After all this, they're still the winners. You know what? We got to find winners right here. I like to look at growth. You know, I think growth is the most important determinant of higher stock prices. I make that point endlessly here. First, let's take them in aggregate. With six of the seven already reported earnings growth for the MAG7 is expected to be 27.2% this quarter. The rest the S&P 500 excluding the MAG7, 7.5% earnings growth. That's almost 20 percentage points difference. 2020. It's incredible. And how about revenue growth? MAG7 is on track to see 15.5% sales growth. The other 493 4.5%, an 11 percentage point difference in the world statistics. That is simply blow away. You rarely ever one group of anything beat the S&P 500 so convincingly. How did they do it look, you conclude that the rest of the SP is just a bunch of losers, something that's not really true, but it does have a lot of losers in it. The other way is to look at the mostly magnificent quarters received from the seven themselves. So let's do this. Let's go over from best to not best because I refuse to call any of these the worst. I want to start with Microsoft because this one has become completely sainted. Microsoft's doing incredibly well in every single phase of its business. The basic enterprise software product is the strongest I've seen it since almost since it started. It's aided by rapid adoption of Copilot, Microsoft's AI product, LinkedIn, just doing really strongly. Their video games selling spectacularly. Azure, the cloud infrastructure division is outstanding with a huge acceleration in growth this quarter. Finally, Microsoft owns a giant slug of open air. It is usually valuable. ChatGPT fundraising round at a $300 billion valuation Microsoft owns 49% of the for profit portion of the company. I followed this company for a long time since it came public. Even before then there's always been one thing, one fly, the only piece of hair on it. This time the quarter was flawless. Yes, flawless. Next, best metal platforms. I am agog at the numbers that Mark Zuckerberg is putting up. The most important one not even talked about on Wall Street. Enough. 3.5 billion people use at least one meta product each day. Come on, that's almost half the planet. That's insane. The company's printing money which is why it can go into the equivalent of free agency and hire incredible talent. Doesn't even matter. You can't even see it in the margins. You know that if you advertise with Meta the ads have more reach than anyone. They'll even design the ad for you. And it will most likely outperform any agency built ad. Although they don't knock the agencies. In the conference call, Meta even has businesses it hasn't even begun to monetize because I think it's so busy monetizing others. Who even knows but how much what's app is worth Mark talks about the Ray Ban glasses is the best format for pretty much everything. Facebook, Instagram, WhatsApp and everything else that they have, including AI. I own a pair actually. I gave my wife, I gave my kids a pair, I gave my step, I gave everybody a pair. I just give them away. I don't know, I think that these things are so darn cool. And you know what? I never thought they could move the needle but after this conference call now I'm not so sure. They could be, they could be real profits here for this company like Microsoft Matters buying a huge number of Nvidia chips for its AI offering Meta. I don't use it much but you know, right after the conference call probably add to the roster third Alphabet. Google Search and YouTube are doing amazingly well. I you know I thought the Gemini, their platform would cannibalize regular Google. Wrong, it hasn't. Instead the complementary business is very, very strong. And Alphabet had a remarkable quarter for all divisions including Waymo Give it its due which is building a nice lead over the rest of the autonomous vehicles in the space. They are they Microsoft Matter buying a gigantic number of Nvidia chips. And that's who wins next. Apple had had had a tremendous report. Better growth than anyone expected. Those who were worried about a slowdown the service revenue stream got their heads handed to them. Cash continues to build. If you're speaking to Tim Cook before the quarterly report, I got the impression that some good things were coming for AI and the perceived weakness and tariffs. Oh, right now Apple's moved production for most US balanced iPhones to India. But if the tariffs on India really go through the roof because of buying Russian oil, they'll just switch back to China. I'm not concerned. That's right, I'm not concerned. They have the money to do a major acquisition in either or both financial and verticals and I think they're going to do it. 5th Amazon well, Amazon shouldn't be troubled. It had a terrific quarter including fantastic retail sales, stunning advertising revenues, decent numbers from Amazon Web Services aws. The reason the stock got hit and keeps getting hit is there's a perception Amazon Web Services growth is slowing. It was flat from the previous quarter and that's being viewed as real weakness. I'm hearing that Amazon may be market share donor to Microsoft and Alphabet and cloud computing and they might. They might stay that way until they stop trying to make do with their own chips and instead buy more. A yes of the ones from Nvidia. I'm not sure this is a totally true narrative because I think it fine, but I do hear about the resistance from young AI developers who are reluctant to use Amazon's platform to develop their own products. I hope management comes on right here and explains more about this issue. Otherwise I fear that this is an important position. My chapel trust is going to keep getting smoked. Help us Amazon. I know I'm greedy. Tesla as a car company, it's a mess. As a tech company is fantastic, especially now that the CEO is being compensated correctly with that $30 billion worth of shares. Mazel tov. I'm convinced that Tesla is worth owning for its autonomous driving and robots, but I accept that the rest of the company's ballast Right now. Finally there is Nvidia. We don't know how it's doing its reports on a different cycle, with its next report coming later this month. But we do know this when you hear that Amazon's not doing well enough because it didn't order enough chips from video like all the other hyperscalers. Well, guess who's really the winner? Nvidia. His bottom line. Even though the Mag 7 has one hand tied behind its back with Tesla, we had tepid reactions to Apple and Amazon's numbers. The fact is these companies loaded with cash, not outrightly expensive nation states I call them, with multiple revenue streams and tight expenses, just can't be beat by any stretch of the Numbers or the imagination. Wowza. Let's go to Leslie in California. Leslie, Jim, Chevron buy seller hold. I read that. I read that upgrade today. Chevron is when. Chevron is when. Why do we say this? Not Mike with his put together between Hess and Venezuela. An unbelievable combination. I like the new write up today that we saw a recommendation. I am with it. I'm with Mike. Let's go to Steve in Virginia. Steve. Yeah, Jim, thanks for all that you do. My question is Colgate Palmolive had a decent quarter and they, you know, reaffirmed their guidance, but the stock seems to just keep going down. It's the, it's the look. The best one in the group, by the way, is Kimberly. Mike Shu did an amazing job. Kimberly is the right one. Now I will say this. I thought the Colgate quarter was darn good. I like the hills. I think Total's doing amazingly well. I don't understand why it's acting the worst of all them. Maybe it's because of the high multiple. But I would not abort. I would not leave Colgate right here. I just can't. But boy, that that's it. No, Wallace, come on the show. I know you don't like media, but you know this is the right place to go. Look, right now it's clear that the Magic 7 just can't be dethroned. Even with some muted earnings reaction from some of its members on what's cooking with Shake Shack, the stock fell after earnings last week before Rebo. Hi, I'm Steve. Investors are getting a rare buying opportunity. Reddit turn engagement into profit. I'm diving into the numbers of the social platform's impressive quarter. And by the way, software company cloudflare is working to protect your intellectual property from illegal use by AI. I'm hearing all about how the company is policing the Internet with the CEO. So stay with Kramer.
- [11:28]
EY Professional
Don't miss a second of Mad Money. Follow imKramer on X. Have a question? Tweet Kramer. Madmentions. Send Jim an email to madmoneynbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you.
- [12:18]
WhatsApp Representative
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- [13:28]
Jim Cramer
During earnings season, when a stock comes in, maybe too hot, even a good quarter might not be enough to prevent it from pulling back. Take Shake Shack iconic burger chain. Last Thursday morning, the company reported pretty clean top and bottom line beat with its highest restaurant level margins in six years, which is what I care about. Yet some people thought there was a fly in the omn shakes shakes, same store sales grew at just 1.8%. Analysts were looking for 2.2%. Give me a break. That's hardly the end of the world. But given that the Stock was up 60% where it was trading when they reported the previous quarter, clearly expectations were high and there was much more there. We have to be careful. But that's why the Stock plunged almost 15% on Thursday and fell another 7% on Friday for rebounding within 3% today. Could this be the pullback we've all been waiting for? Let's check in with Rob Lynch. He's the CEO of Shake Shack, yet a better reader of the quarter. And what's next? Mr. Lynch, welcome back to Bit Money.
- [14:14]
Rob Lynch
Thanks, Jim.
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Jim Cramer
Okay, so first, I've always felt that what matters is not the monthly number or the quarterly number, but the cadence. What was the cadence of the quarter each month going into the end?
- [14:25]
Rob Lynch
Yeah, I would tell you Q1 was a tough quarter and it continued into April where we were down 1% comps. And so we came out of the quarter with positive comps, almost 2%. And we also announced that in July we were up 3.2% but it's the composition of the comps that really matters. We're moving from a brand that for a long time was dependent upon pricing to drive our growth. Now we're driving traffic growth. It's healthy, sustainable growth.
- [14:51]
Jim Cramer
The traffic is a very big in versus first. That was really good. Yeah. Okay, so Rob, you took over and you had to make some operational changes. You want it to be better. You're not going to just blow out things before everything's right. But I think you have it now. And one of the reasons why I know that is because we check social media and the social for your company is extraordinary. I mean even, you know, we've got someone who just had your food on Delta. The Shake Shack burger knocked it out of the park. It's a perfect burger choice for an airplane. I hope it continues past 2025. I've never seen anyone say good things about airline food. You do it.
- [15:23]
Rob Lynch
Yeah, it's. It's pretty remarkable. You know, we worked with Delta for almost a year to make sure that we could deliver the quality that our guests expect when they come into our shacks. So that that year was well spent. We've gotten nothing but really positive feedback. We've gone from being in one airport testing earlier this year to now 13 airports. So we're really excited about expanding that and looking at other opportunities where we can bring the Shack brand and bring quality into places maybe you wouldn't expect it.
- [15:50]
Jim Cramer
Well, it sounds like that you can start putting up a lot more stores and your stores, each one is very lucrative.
- [15:55]
Rob Lynch
Yeah, I mean we've really improved our restaurant margins over the last few years. We're Almost at a 24 margin last quarter, which is the highest we've been in the last six years. So when you're delivering great margins and we've also taken 10% cost out of the build out for our restaurants. So we're delivering great cash on cash returns for our investors. So we're going to continue building this year we've guided to between 45 and 50. We're going to hit that next year. We're going to do even more in the year after that. We're going to do more. We've got our pipeline all the way into 2027 at this point.
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Jim Cramer
That's fabulous. Now I do think that people should recognize that there is a value proposition here. Some people say it's too expensive. I say, have you been there lately? You've got some deals. Yeah.
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Rob Lynch
You know, we talk about value for the money. Right?
- [16:36]
Jim Cramer
Right.
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Rob Lynch
It's not, we're never going to be the lowest price point product out there. It just costs more to make.
- [16:41]
Jim Cramer
We don't want that because it's made to order.
- [16:43]
Rob Lynch
Yeah, every, every burger, every day, made to order. So we're looking at ways where we can provide more value. Right now we're running a dollar drink promotion if you download our app and that's driving not only more traffic, but it's driving app downloads which, which are our most valuable customers.
- [16:59]
Jim Cramer
You have not done advertising yet. You have a lot of word of mouth. What will happen when you start doing all this advertising?
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Rob Lynch
Well, I hope a lot of good things happen and you know, we're starting to dip our toe in the water just the last few weeks where we've started buying some paid media. We're really happy with the initial results and look forward to learning, optimizing and continuing to increase that investment and drive that top line sales growth.
- [17:21]
Jim Cramer
I know you as an innovator. It sounds like you're doing some pretty good innovation that's working.
- [17:25]
Rob Lynch
Yeah, I mean our Dubai shake has been a huge hit. Lots of social media buzz, lots of word of mouth buzz. And we just started advertising it two weeks ago and we're seeing it increase. But we've got a lot more to come. We're really excited about some big ideas we have coming in the fourth quarter. And the whole pipeline for 2026 is already built from a culinary standpoint and a marketing innovation standpoint.
- [17:47]
Jim Cramer
New things just keep popping up. A new place in Atlanta. Braves next to the stadium.
- [17:54]
Rob Lynch
Yeah, we're really excited about that. We're actually opening up our second support center in Atlanta. So it'll complement our New York support center, allow us to bring people from all over the globe to our innovation center there. And right down the street we built our first shack bar. Boozy shakes, classic cocktails, full bar complementing our great food. It's been a huge success.
- [18:17]
Jim Cramer
Do you think you can roll it out while we work in other cities?
- [18:19]
Rob Lynch
You know, I actually want to build like 100 of them.
- [18:22]
Jim Cramer
Really?
- [18:22]
Rob Lynch
It's so great. But it's a real, it's got to have the right real estate. Needs to be in the right environment where people are going to come in and not just look for our food, but want to sit down and enjoy a cocktail as well. So we're looking at real estate, but I'd love to build a lot more of them.
- [18:36]
Jim Cramer
I've always felt that you're a coast guy. East coast, west coast, Belize. How's it plan in the Great part of the country.
- [18:43]
Rob Lynch
Well, we love all of our guests, Jim. And in fact, as we continue to grow and build more units, markets, a lot of our shacks are showing up in places maybe you wouldn't expect. We just built our first shack and opening up our first shack in Oklahoma. And we're doing incredibly well. I mean, right now. Dubai Shake we talked about, guess which state has the highest demand for our Dubai Shake?
- [19:06]
Jim Cramer
Florida.
- [19:06]
Rob Lynch
Texas. Texas and Florida's number two.
- [19:09]
Jim Cramer
I mean, I would not our bland.
- [19:11]
Rob Lynch
Our brand, we've proven plays well across the country. That's why we increased our, you know, a total addressable market up to 1500 this year. We really believe that Shake Shack can. Can live in every community.
- [19:22]
Jim Cramer
Now, I know a lot of people feel that. We know beef prices going up. We know it's a challenge. But you're meeting the challenge. You're not taking your pricing up huge.
- [19:30]
Rob Lynch
No, we've. We've built so much productivity over the last year, our operating margins have gone from right around 20 up to 24%, almost 24% last quarter. We're right now working within our supply chain to find a lot more productivity. So we're able to mitigate that inflation with all the productivity. I mean, we still have pricing power if we choose, if we need to, if there's enough inflation. So pricing will always be a part of the model, but we're not dependent upon it like we used to be.
- [19:57]
Jim Cramer
Now, I don't mean to be critical, but my biggest problem is, is that I will wait in line and it'll get at the airport and it'll come too close to my flight, and I feel I have to leave the line. I know that it's tough to staff some of these places in the airports, but we need more staff or something because the line is a little too long.
- [20:16]
Rob Lynch
Yeah, we're always working with our licensed partners who operate those airport shacks to make sure that, you know, they're meeting our standards. We've been able to significantly improve our speed of service in all of our company restaurants. So we've built the process. We've got equipment solutions, we've got labor management solutions to help solve those problems. So we work with, closely with our licensed partner. You know, the airport's a tough environment for our partners. We're really supportive of them. But I think we got to get better.
- [20:42]
Jim Cramer
Right? That's the way to go. Now, one last thing. When we talk about price, we hardly ever able to talk about healthy food. I regard your food as healthy, so therefore, I'M a little less price sensitive. Do others feel the same as I do?
- [20:56]
Rob Lynch
I think most people in New York recognize that Shake Shack came from eleven Madison, Madison Square park, and so their understanding of the quality of the ingredients is easy. We have to help the rest of our guests across the country who may not be as familiar with our origin story, recognize that we use the best quality ingredients across the board, from our beef to our fries to the custard we put in our shakes. You know we don't put ice cream in our shakes.
- [21:24]
Jim Cramer
No, I know you do fresh made.
- [21:26]
Rob Lynch
Custard in the shack every day.
- [21:27]
Jim Cramer
Well, we all have our favorite places. I've got one downtown in Philadelphia. I've got one in Brooke. We all have our favorite shacks. Yeah, and that's because you do such a good job.
- [21:35]
Rob Lynch
But they're all my children, Jim, so I like that I can't pick one.
- [21:38]
Jim Cramer
I like that. That's why you keep it that way. That's terrific. That's Rob Wood, CEO of Shake Shack. I obviously think that this decline in the price is the chance to get in. We haven't had many. That money's back here for the break.
- [21:50]
EY Professional
Coming up, Kramer's getting online and scrolling through Reddit's recent earnings earnings report. Don't go AFK this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update. Wherever you get your podcasts at Capella.
- [22:32]
WhatsApp Representative
University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.
- [22:55]
Jim Cramer
We had a lot of fireworks last week. Earnings from some of the largest companies on earth. Then on Friday, there was the softer than expected nonfarm payroll support, which led President Trump, of course, to outright fire the head of the Bureau of Labor Statistics. So you might have missed it when Reddit reported last Thursday after the close, they usually pop their online message board, shot the lights out and stock jumped 17.5% on Friday for tackling another 7% today. That's some move. Even if the incredible move. Guess what? I got it. I think Reddit's got a lot More room to run. I'm not kidding. This one's been a huge winner for us. I've been following the company closely ever since it came public early last year and started recommending it by a year and a half ago when it was trading around 50. I thought Reddit had tremendous growth. Amazing digital advertising business because it's basically the last bastion of the old school Internet. If you have a question about a niche subject, there's a Reddit forum with countless obsessive posters who'll be thrilled to answer for you. And some of the responses are great. At the same time, the whole platform is a treasure trove of data, something that developers desperately want access to in order to train generative AI platforms. The only time that I really waver on Reddit was last December, when the stock had run to the 1 50s, basically triple from where I started recommending. I felt like I was being greedy. So I told you to bring the restaurant part of position, but leave enough on that you can keep playing with the house's money from there. Reddit kept running for the next couple of months, peaking at $230 in January. Then it plummeted all the way back down to around 80 bucks at its post Liberation Day lows in April. And you know what? That turned out to be an incredible buying opportunity, which is why I pounded the table and read it in May, although by then it already rebounded by 200. I'm sorry, to 125 bucks. I mean, boom. Just like that. Now, for most of July, Reddit bounced between the 140s and 150s, and to me, that looked like a perfect game. But even as someone who adores this company, I had no idea Reddit was capable of delivering a quarter as strong as the one they reported last Thursday night. These results literally were staggering. Much better than expected. Basically, every line company put up 78% revenue growth, much higher than anticipated, and a staggering acceleration versus the last several quarters. There's nothing Wall street loves more than accelerating revenue growth, and Reddit gave it to you. What's driving the growth? Reddit's core advertising business is on fire with ad revenue up. Get this 84% year over year, crushing the estimates. U.S. business was up 79%, much better than expected. International up in line 71%. Not only are they making more money, Reddit's also become more profitable. Their gross margin expanded by 130 basis points year over year, and their EBITDA margin expanded by 1940 basis points. In the end, the company earned 45 cents per share, more than double the 19 cents that the analysts were looking for. No wonder the stock went up so much. Finally, most of Reddit's key operating metrics they were excellent Daily Active unique users averaged 1 10.4 million in the second quarter. That's up 21% year over year, beating expectations weekly active unique swept 22% year over year logged in users grew 17% logged out users were up 24%. Finally, Reddit's average revenue per unique user really important metric was up 47% year over year to $4.53. And it's only looking for $3.90. Basically, they've got strong user growth and each user is making the company a heck of a lot more money. Even better, Reddit issued a robust forecast for the current quarter company projecting about 55% revenue growth at the midpoint of their guidance, which is well above expectations. They're also talking about get this 102% growth for earnings, for interest, taxes, depreciation, amortization. Again, much better than expected. It's easy to see why the stock, which had already run up 7.5% on Thursday night, what reported thanks to Medicine quarter the night before, tacked on another 17.5% on Friday. Even a negative tape, then another 7% today. Overall the stocks gained over 50 points, or 35% over the past three sessions. It's now back to its highest level since mid February, and I know it sounds strange, but I don't think it's done. So how to Reddit pull this off While the numbers speak for themselves, you need to understand the story behind the numbers, because that's the only way to tell if these games are sustainable. And that's what you need to care about on the conference call, which was really exciting. Yeah, I'm not getting exciting management into great detail about what's drawing users to the platform, why advertisers keep falling in love with it. First, regarding users, Reddit co founder and CEO Steve Huffman, aka Spez, broke down the company's 110 million daily average unique users into two groups. Scrollers. Those are habitual users who regularly come to Reddit to poke around, and seekers who come to Reddit to find answers to their specific questions. 50 million of the 110 million fall to the scroller category and are entrenched users. And the 60 million seekers also find great value in the platform because if you got a question and you want it answered by an actual human being, that's the place to go. And it's not just the users who get it, the advertisers get it too. Hoffman explained the value proposition. You're saying that, quote, as more of the content you see online is synthesized, summarized and sanitized by AI, Reddit stands out for its honesty and subjectivity. I wish I had said it. I can't say it better. He added that quote, people want multiple viewpoints and lived experiences, live spirit. This is why Reddit is synonymous with product and service recommendations. People turn to Reddit when they want to make informed decisions fast. And quote, anecdote Luke as an advertiser for my wife's mezcal business, false foil, I think is absolutely right. I mean I found that advertising with Reddit, I don't mean to advertise advertising, but it's dramatically cheaper than advertising with Instagram or Google. And more important, targeted Reddit is the exact audience that we want. There's a community for everything on this platform and that includes people who drink mescal, which gives us four of the best bang for the buck. I've looked everywhere for that kind of thing. I can't find it now. Clearly I'm not alone here. As CEO of Jennifer Wang put it in the conference call, Reddit's ad growth was, quote, driven by broad based strength across the business, with the majority of our growth coming from existing advertisers who are deepening their investments and retaining their share of spending with us, end quote. But crucially, she added, quote, we also continue to acquire new customers. Total active advertising count expanded by over 50% year over year in Q2, spanning large, mid market and small and medium sized businesses, end quote. That is huge. Everybody's realizing that is a fantastic place to advertise. It did take a little while, I know, because it's been around for a long time, but it is now. It's got, let's say, commercial value. I am a big believer in the revolution, you know that. But in fairness, a lot of AI generated content is slop. As the kids say. Sometimes you just want to communicate with real human beings and that's what makes Reddit so valuable. Speaking of, AI management's already licensing their data to AI platforms and they believe this will eventually be a big source of business, although it's still very early. I've been encouraging. I mean, look, I mean, I would say if you get that, if you got that, this stock will go up to 300, but they still haven't figured that out yet. I think here's the bottom line. After last week's tremendous quarter, I think Reddit Might be the best growth story in the digital advertising space and I bet the stock's got a lot more room to to run. So I want you to stick with Reddit. Can I say I think it's that good a story. Let's go to Eli in California. Eli. Hi Jim. Thank you for taking my call. Of course, Eli. Thank you. Yeah, and I've been listening to you and really enjoy the show. Thank you. I had question about Roblox RBLX. I had bought some stocks when it was at 50 and then sold them back at hundred made some profit. But I was wondering, is it okay to buy at this level again? I do think it is. I think Dave Pazuki is doing a remarkable job. That was a terrific quarter. I think they could have the breakout year next year. And I want you to be in the story. I think it's really fabulous. I'm glad you asked me about it because it's very hard to find a story that has more growth than roadblocks. Very good. I read it reported a blowout set of numbers last week and I think it's got more room to run higher thanks to all the tailwinds it's riding right now. Now there's much more money, including my exclusive cybersecurity company, Cloudflare. Talk about a stock that's on fire. Cloudflare wants AI chat bots to stop ripping off intellectual property and I'm learning more about its pursuit with the CEO. And speculation has crept into an important corner of the market. I'm sharing when enthusiasm could become a red flag. Not there yet, but you got to know about it in order to call us rapid fire in tonight's edition of the Lightning Round. So stay with creep. Looks like one of my favorite cloud players ponding idiots do. After the cybersecurity company reported an excellent quarter last Thursday night, I see its stock sink. 3.6% on Friday was dragged down by that broader sell off. Today though, Cloudflare snap back up more than 4%, which makes perfect sense because these guys delivered a clean beat and raised quarter with better than expected numbers in every line for the quarter. Truly strong guidance this thing. None of this seemed to matter but with today's rally, the stock's now sitting at its highest level in nearly four years and within spitting distance of its Covid era peaking. So let's take a closer look at Matthew Prince. He's the co founder, co chair and CEO of Cloud31. More Mr. Pritch, congrats on a strong quarter. Welcome back to Money. Thanks Jim. Okay, so Matthew, you did see an acceleration of revenue growth. We do not see that very often. You also hit the $2 billion mark. What is behind the strength? Because it's truly pretty incredible.
- [32:28]
Matthew Prince
Well, I think the first thing is our team. We have just a world class team that has come together to take Cloudflare for what was traditionally a product led growth company to today a true enterprise class machine. So I know you know Mark Anderson used to run Alteryx, now now is running Cloudflare's go to market team. He's just made an incredible transformation where we are speaking to the largest companies in the world and delivering all of their cybersecurity needs and their network security needs.
- [32:53]
Jim Cramer
I know it's not very lucrative, but I got to go into this meeting because it's just so important. I have been a big believer having started the street.com by the way, it's one of your customers. I do, I look at what's going on and I say, you know what, there's a, there's a power grab being done by the, these big sites, you know, like a perplexity for instance, and they're getting away with murder, I think, because if we don't protect content, then no one's going to develop content. Probably 85 to 90% of my content was to Google and then Google back to me. You are the only people, you're the only firm standing up for the individual journalists out there. Can you tell us how that works, how it's working and whether you can stop what I regard as theft?
- [33:36]
Matthew Prince
Yeah, you know, I think that people get this confused, but the Internet has never been free. The web has never been free. Someone has always paid for it. And for a long time that was search engines that sent you traffic. And then you as a content creator could get value from that traffic, from either selling ads or selling subscriptions, or even just knowing, from the ego of knowing that people were reading your stuff. What's happening though is the world is transitioning from search engines to what are today answer engines. They aren't sending back traffic. And so just because you had a deal with Google where they got your traffic for free in exchange for sending you traffic, if they're not giving you anything back, then they have to do something else to compensate you because journalism, academia, researchers, they all need to eat. And we need some way to make sure that they are getting compensated for the incredibly hard work that they're doing. And so in the past it was Google that was the great patron of the web. But in the future it's going to need to be the AI companies, which will increasingly be the interface of the web. We've got to find a way for them to compensate journalists like you who do incredibly hard work and are giving the original content. That is the fuel that runs these AI engines.
- [34:46]
Jim Cramer
Well, I got to tell you, Matthew, one of my favorites that I use constantly. I use Perplexity. I read your blog today and now I feel like, wait a second. Maybe Perplexity is a bad actor.
- [34:57]
Matthew Prince
They have been an incredibly bad actor in this space. They have been doing things that I think are most closely resemble what the North Korean hackers do when they try to steal content or hack different sites online. If you tell them that they can't get your site, they go through all kinds of different tricks and deception in order to try and get your content, which you created. And so what we need to do is say that it's not allowed. If you say that they can't have your content without paying you for it, then they shouldn't be able to steal it out the back door. And the great news is that Clefler is incredibly good at stopping the North Koreans and will be incredibly good at stopping Perplexity, too.
- [35:31]
Jim Cramer
Well, I feel we have already devoted too much to the. No, I didn't. I think what you're doing is unbelievable. So I didn't devote too much time to it. I did want to talk about Shakespeare. You are an English major. You've got, you know, the Shakespeare's five acts. You've got a bunch of, I think that you're going to have to go into, like, I think it's going to be Henry IV part one and two when we're done with this, because there's way too many acts that are ahead of you. But tell us where you are in terms of Cloudflare's development. Sure.
- [35:55]
Matthew Prince
So, you know, Cloudflare started with a simple idea which was, could we put a firewall in the cloud? What we needed to do in order to support that, to have the data to have it, it was make it available for everyone for free. Once we did that, that gave us just an incredible set of problems that we needed to solve both for ourself and for our customers. And so, you know, act one, we think of as our reverse proxy products. Those are things like Web Application Firewall, DDoS mitigation. Act two are forward proxy product firewall products. Those are things like VPN replacement, Zero Trust, sase. Act three is our developer platform, which has been just wildly successful. And today, as we're helping content creators make sure that they can get paid and that the business model of the web continues to exist and evolve. I think that's going to be the fourth act of Cloudflare. And as you said, I'm a recovering Shakespeare English literature major. Don't hold that against me.
- [36:44]
Jim Cramer
But.
- [36:44]
Matthew Prince
But we think we have still a lot more up our sleeve. Every one of Shakespeare's plays was at least five acts long.
- [36:49]
Jim Cramer
And I would never hold against you. I love Shakespeare. Now, I do say that a lot of companies, come on, they've got a land and expand strategy. The amount of business that you get after you're in is far in excess of almost every one of these land expands. Who Come on, tell people what happens. You get in and then people just like what you do, and then you get really big contracts.
- [37:10]
Matthew Prince
Yeah, that's exactly right. You know, I think we have always made it said that we would make it available for anyone. And whether that's an individual developer or a small team within a larger organization, we tend to solve an immediate problem and then build a relationship. And what I think Mark Anderson and the team, our go to Market team, have done is really say we don't just want to build relationships with the individual practitioners, but increasingly I'm spending my time with the CEOs of the world's largest companies and saying, if you have a network security problem, if you need to have a faster network, if you have to have more reliable network, and everybody does, Cloudflare is the network that is going to be there and is going to continue to innovate and deliver for the future.
- [37:50]
Jim Cramer
Now, people need to know, I think you have more exposure worldwide than any other outfit that does what you do. You're everywhere, right? I mean, there isn't a part of the world that you don't cover.
- [38:01]
Matthew Prince
No. We're in over 120 countries around the world. You know, in 300 and some odd 60s, some odd cities around the world, thousands of data centers where we're putting our equipment directly in. And what that means is that wherever you are, whatever product you're using from us, we can make sure that it's fast and reliable. So if you have a CEO who travels extensively and you're getting complaints about how the VPN service is really slow when they're, I don't know, visiting the guerrillas in Rwanda, we have a data center in Kigali where we can serve that, that CEO and make sure that no matter where they are in the world, we can make sure that they are fast, reliable, and secure.
- [38:39]
Jim Cramer
Excellent. Well anyway, Matthew, I'm so glad you got your due. Was a really incredible quarter. People should read actually read this conference call because it's really one of the best disposition of what I've seen of the way a company can grow. Matthew Prince is co founder, co chair and CEO of Cloudflare. One of the great growth stories out there. Thank you, Matthew. Thanks. Jim's back here for the break.
- [39:02]
EY Professional
Coming up, Kramer takes your calls. And the sky's the limit. It's a fast fire lightning round.
- [39:09]
Jim Cramer
Next, it is time for the white rocker. Bye bye bye. Joining the course. And then the lightning round is over. Are you ready? Ski D? Yeah. Tell the white room crazy we're going to start with Barbara and Texas. Barbara. Hey Jim. Second time caller. I love you, man, but the pain. I bought this stock at a high of 411 figuring, oh, the CEO or the owner is such a genius. We'll be back up above this right away. And the stuff, which one? Oh, hey, look, you're fine, Tessa. Tesla's morphing right now. It's in it. It's in transition from being a car company. You're being a technology company. You want to be in there because the tech is worth a lot more than what it's selling for right now. Don't worry. Care where you bought it. I care where it's going to. Let's go to Chris in North Carolina, Chris Kramer, club member, big fan. First time caller here from Winston Salem North. Let's go to work. Let's go to work. Let's go to work. And I want to know your thoughts on Accenture ac. Accenture is one of the worst acting stocks in the on Friday. I can't believe how poorly it's doing. I'm not going to get behind it. Do we find out what the heck is really going on there? Let's go to Mark in second. Mark. Jim, we are. Mark, what's happening? Thanks for taking my call and for making stock analysis available for us home gamers. My question for you. Yeah, yeah, definitely. My question for you is with the recent recalls and rising costs of raw materials, is Ford Motors still a buy or the stock acts better despite that bad news, which I like. However, I will have to say that if they don't get that warranty stuff down, it is just too tough to recommend. How about we go to Frank in California? Frank. Hey, Mr. Kramer, I'll make this quick. I've been holding onto the stock for a while now and I'm going mad because it's doing nothing. But I really believe in the company. Talking about Target. If you believe in the company, you like shopping there. It's got a good balance sheet, 40% yield and you're free to buy it. I happen to like TJX and Costco. I TGX breakout move today. Let's go to Paul in Ohio, please. Paul. Booyah.
- [41:29]
Matthew Prince
Jim Cramer.
- [41:30]
Jim Cramer
Booyah. Paul. Hit me. Hit me again. Yeah. With their earnings coming up in a couple of weeks, should I hold sell or buy more? Snowflake? I like Snowflake. I think you can buy more. I honestly do. I think that the quarter is going to be a very, very good quarter and that ladies and gentlemen of the Lightning round.
- [41:50]
EY Professional
The Lightning round is sponsored by Charles Schwab. Coming up, Kramer's identified a new type of meme stock in this market. One that's ringing a bell with investors. He's revealing what it is next.
- [42:07]
Jim Cramer
Boo yah for the Emperor of Cramerica, Honorable James J. Kramer.
- [42:12]
Rob Lynch
You got me jumping around my office right now.
- [42:14]
Jim Cramer
Thank you so much for all you do for us. I enjoy your show and I find it very entertaining and informative. I watched your first ever episode of Mad money back in 2005 and I've been watching every single episode ever since.
- [42:27]
EY Professional
Don't miss Mad Money every night at 6pm Eastern. Plus join the CNBC investing club and stick with Kramer around the clock.
- [42:44]
Jim Cramer
Market darling Palantir Technology for a spectacular quarter after the close. Much better than expected. Revenue up 48% year over year. 2 cent earnings beat off a 14 cent basis. Management raising their full year forecast dramatically. Companies Rule 40 score which combines the revenue growth rate with the adjusted operating margin came in at 94 for the quarter. I've never seen anything like it. No wonder this already red hot stock could surge in after hours trading. And look, I get Palantir. It's among the most popular stocks in the universe. Alex Karp is one of the smartest, most perceptive CEOs I've ever met. His team is amazing and the contracts he accrued are incredible. But his stock, it's overvalued versus any metric that I can find. The least of which may be earnings per share. It sells it something like an astounding 277 times earnings. And that was before this quarter and tonight's after hours gains. I accept that sometimes you have to pay too much for a real spac. Remember we have two markets going here. The normal one and the super speculative one that's made up of various crypto currencies and the stocks that back them along with flying cars like Joby Aviation does an acquisition, it's not even that good. And stock goes up big. Nuclear power, data center and of course Palantir, which I again bless. Okay, but of all the speculation we're seeing here, nothing repulses me more than the red hot IPO market. Because when IPOs get too hot, they can lead to a bull market slaughterhouse. Right now, IPOs have become the new meme stocks. And the investment banks doing the offerings don't seem to know it. The meme Trend began with Coral 8 which came public at 40. Incredibly small float or amount of was offered for trading. The underwriters anxious for the deal to work price in the hole are way lower than they thought they they would have to do in the downsize. Then the downsides, the offering selling just 37.5 million shares, raising just 1.5 billion. They originally hoped for something that's $1 billion more than now. Corvette is worth over 50 billion. The stock was initially driven up by meansters who knew there was no new supply. So they just kept buying and buying and buying. How do I know this? Because this pattern that I've seen since 1998, I recognize it. Core Weave, a data center company was simply very easy to take up because there wasn't much supply, especially if the deal was downsized. I'm a huge fan of the business, but the stock's pretty expensive. Next up, the larger deal with Circle Internet Group. IPO market was starting to heat up by the time Circle came public in early June. But even though Circle upsized this deal steeply and raised its offer price range and then still price well above the high end of the range, it wasn't ambitious enough. Deal price at 31. But the stock co produced for trading at 69. Within three weeks it was nearly at 300. It's just cool off around they come down to 165. That's still probably way too high I think. Winners from Core we rolled their take in a circle and turn it into a meme stock. Which brings me to the last meme stock I talk about, Figma. Here's a deal of roughly 37 million shares, only a third of which were offered by the company. The rest came from investors and insiders. Price at 33. Definition of suboptimal based on the trading core we've encircled anyone who follows the market as closely as I do and the people who do these deals should follow them more closely than I do. Had the hot money was going to Go to Figma. The deal raised 1.2 billion companies, now worth 43 billion if the stock plummeted today, but it was valued at 70 billion at its peak. That's just crazy town. And I'm sure the bosses are going to ask the people who came up with that pricing what were you thinking? Didn't you know that this new level of hot money will pay anything? Anyone who's been around for more than 20 years knows that these IPOs are now part of a speculative bubble and no professional wants to be culpable for igniting this. Free for all you could say, who cares? Everyone's making money. What's the problem? I come back and say, don't we wish that the dot com bubble hadn't happened? Don't we wish that the 2022 meltdown hadn't happened? It was stuff like this that drove it. The syndicate desk were clues to what was really happening. I know syndicate test can't tame speculation, but they should know when they see these incredible doubles from the first day that the coloration has changed. And they shouldn't stoke the gamblers or throw their hands up and just say, hey, there's nothing we can do about it. That's not what we want. Instead, we want investing and we want to make money. The circles, the figures, the crypto stocks, they're all what's wrong with the market, not what's right. The syndicate desk who do the pricing need to know that once there's more wrong than right, this bull will turn into a bear and their earnings at their companies will go up in smoke. I like to say this always bull market. Sell my problems find just for you right here on Man Money. I'm Drew Kramer. See you tomorrow.
- [47:04]
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All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC, NBCUniversal or their parent company or affiliates, and may have been previously disseminated by Kramer on television, radio, Internet, or another medium. You should not treat any opinion expressed by Jim Cramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer Is it time to reimagine your future? The right business skills may make a difference in your career at Capella University. We offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.