Audioburst Search

Mad Money w/Jim Cramer 09/16/19


Brought to you by fidelity where decisions are clear and costs are lower than ever learn more about our industry leading value and open an account today at fidelity dot com slash trading reading the brokerage services. LLC MEMBER NYSE. My mission is simple to make you money I'm here to level the playing field investors. There's always work at summer and I promised to help you find money starts out crater. Well can have money what can the America. I'll be. One make France under trying to make some money. My job is not just entertainment. Educate teach you put it in context. Call me one hundred and seventy three. CBC tweet me at a few years ago. If I told you that a Dromey was about to take gap half of Saudi Arabia's production at our stock market would barely blink. You would have called me absolutely crazy it yet. That's exactly what just had them. The Dow something one hundred forty three points the SNP declining went through the Nasdaq backsliding a meager a two eight percent even though the price of crude by more than ten percent gigantic gigantic game how impossible how could we have so many stocks had actually sleep. Raleigh news simple were changed country. We have so much oil in this country and we have a lot of stocks now do better with higher oil prices and as well. We have a lot of stocks to thrive. Higher oil causes economy to slow. United States have today looks a lot different from the United States of even ten years ago first. Let's understand it looks like Iran. Launch drone strikes that wiped out a chunk of Saudi Arabia's oil infrastructure and other biggest export or petroleum a world that sent the price of crude story the biggest gain eleven years and higher oil translates into higher gasoline which means consumers have less money to spend on this going out out to shop so we had a base all from retail make perfect sense especially since they've had an humungous run and we were looking for a reason and take province remember last week. I told you that might proprietary Osler. That's put out by standard and Poor's when I pay for what was too high at plus eight anything nor for five me so you should be doing some self celso and that made this market vulnerable. I said that we were due for so off. Even if I couldn't tell you the reason why that's might happen member. The two shows on this oil shock is exactly the kind of out of the field incident. I was talking about and of course a lot of carnage. Even if it wasn't obvious from the averages beyond reach you which didn't get pummeled except for the value place like a macy's the big package could stocks just got slammed. I want you to think clorox proctor doctrine gamble estee lauder. They're all regard as having a big reliance on plastic for the packaging plastics me from well and they've also got substantial freight costs again those go higher with we'll but but in practice been a monster sock estee lauder. It's been incredible again. All you got was profiting. Naturally the airlines get into American can United Delta or posted outside losses so the where wheel areas of weakness but the truth is this park hill up incredibly well in the old days. The averages would have plunged on this kind of oil shock doc. I know because I've lived through a bunch of them. Starting nineteen seventy-three we'd be freaking out about surging inflation and gas lines and huge declining consumer spending now though Saudi Arabia losing half of its output. It's just not a big deal. Remember the United States is going from Preussen five million barrels of oil per day gigantic importer reporter to a twelve million barrels per day and we do a lot of exporting over the same period we put policies in place that make our nation a lot more energy efficient who needs Saudi Arabia listen to Scott Sheffield when he came here not that long pioneer natural resources and by the way Tina the patch he said it won't be long to a person seventeen eighteen million barrels a day if the Saudis can't pump basically get this gives American producers a much-needed spike in profits lawyer to pay down debt and take control their finances but in the end though our producers are going to sow the seeds of their own destruction destruction member one Mandy Brazil smart dot com came and said that that they keep spending and they turt- themselves because whenever the price of cougars up they just started drilling again the new supply pushes prices right back down. There are only three things that keep a lid on American oil. Oh production currently I. We don't have enough pipelines in the Permian Basin. There are two about to open. That's the incredibly cheap well rich region Texas second. We don't have big ports awards to handle this gigantic tankers that can hold two million barrels and third until the recent roll back. The government didn't allow excessive flaring meaning burning off of natural gas byproducts. I products that comes when you drill for oil because it's terrible for the environment before today's spike natural guest was so cheap that it wasn't even worth keeping if you couldn't flare it off. It was an impediment into truly oil. I don't expect anything but a short termer preview on any of these issues. Although some oil companies have started taking advantage of the pro flaring position the President has staked out recently however most of the larger producers are reluctant to embrace the new world because they don't want to ruin natural gas is reputation is cleaner fuel than coal members taken last year from Kobe utilities either. The price of crude oil stocks are with it today. They were up so much that they boyd the entire five hundred rally an Exxon Chevron help prop up the Dow without them. We would have been a lot lower that said my chapel. Trust was a big seller of the oil today. I don't think this move is sustainable. Obviously we left some but time to go these imagine. They don't want any resource stocks. Now I WANNA take another whole situation by goodwill means for us but for a trade your partner China the People's Republic has a lot going forward economically. He said what you will about the Chinese Communist Party. You create a million jobs short period time. Even I know a lot of it was taken Josh Moss but there's one thing that they don't have natural resources for China and your trump's oil supplies very bad news their government is slap slap tariffs on US soil but you know what they're still using about a million thousand day that originates in our borders national international commodity and now the price of crude has surged making a real slow down there far far more likely beyond the oils else rallied today. Let's say we saw strength in the secular growth stocks that don't need a strong global economy make their numbers think the cloud kings like service now workday. VM VM where Dobie. That's an amazing resilience in itself and if you stay tuned we'll tell you which ones are still worth snapping up not longer the clouds sucks. We're getting hammered hammered now. They're benefiting from fresh rotation out of the consumer packaged goods stocks into the stock some companies that are unaffected by well. They can still grow. That's why I think it's entirely possible possible. We could shrug off this news. Maybe the next thing you know the Saudi oil facilities we back online however it is also possible that we have a brand new world of worry and I'm talking about how those ten Jones used to smash Saudi Arabia's infrastructure demonstrate a serious vulnerability for the Saudis and really any country you WANNA. Stop these drone attacks. You need to have vastly expanded radar scrape for Lockheed Martin Raytheon in L. Three Harris technologies of these L. three houses my favorite but I don't like to chase the stock. That's up more than six bucks in a single single session. Honestly I think the military side of things is the most worrisome especially as the president tweeted that we are and I quote locked and loaded ready to retaliate palliate presumably against Iran the moment disorders check off on. We really don't need a war with Iran right now but who knows what that tweet what that tweet even means and by the way just you know if you could have solar powered drones will think about it. It could go the world over. That's a worry I'm worried about the bottom line. I know the stock market's resilience silliest could melt if the White House decides to make an all out strike against Iran but man I got to tell you it's amazing how the just pretty much shrugged off such a major decline something that would have been totally impossible to even think about a decade ago and that's worth keeping in mind what I'm calling today a victory for the a bowls in Florida Patty. I can't think for taking my call and you do for us. My question is about OCTA. I I bought it at one fifteen and I'm in the House of pays. I WanNa know what your opinion is on the price drop in. Where do you see it going okay. I think OCTA is just terrific company. I think that you have to take a long long. Term View that management does it is really yes. They rotated out of these stocks. I have total won't faith todd mckinney. You taught appeared on US squawk box the other day besides besides from hurting my feelings. I think he did a very good job but maybe star could robin. VN appeared on mad money. I think you're fine avenue in California Avin Kramer. I'm pro American living in the United States of America. My question is about the Stock Ticker C. Y. B. R. Cyber Ark couple of weeks ago. You said it was a great guy but it's actually gone down a a bit fifteen percent. I was wondering if you're considering this. Maybe even a better by now or should we wait Evan. I mean remember. I've liked cyborg since the thirty so I can't be a trader. I can't say you know at one forty. I hate it at one ten. I like it at one on one. I Hate I mean to me Sabra Same Sabra data great quarter and and I even though the chart looks bad people dumping all over it's good. I mean if I were starting to position in cyber. I'd started right here okay. Let's go to Chris Simas Concept Chris. Jim Boulia crass pigeon. I I'd like to hear your thoughts on the stock. Camping world all depend getting hit and hit hard recently and curious to hear your thoughts and also if you made any progress on getting Merck's moments on the show well marcus has been one quarter. Wasn't that good. It started snapping back lists. We put the IT. It just isn't doing that. Well and I think that et Marcus Lemoyne's is a friend of the show but to stop the company hasn't been doing that. Well and I think that's pair. Look neither store the camping world business so to speak is not not doing that well and a lot of that may be interest rates but a lot of it just might be that they're out of favor okay. How the heck did we not tank in the wake of the Saudi Arabia oil that you know how we are not the old United States victory for the Bulls maybe tonight the club group is taking a beating over the past few months but which stocks the group could see their forecast clearing up and which must be of boy. I'm going to be my take then this year is slow oh by. Peos and tech space but his cloudflare stands out. I'm minding the new company came public and it's a companies hoping ushering a brand new gold rush don't miss my I sit down with an ethical paxos the find out about its move to offer physical gold on the watching and stay with Kramer don't miss a second of mad money follow at Jim Cramer on twitter a question tweet Gramer Hashtag mad tweets send Jiminy mail to mad money at CNBC DOT COM or give us a call at one eight hundred seven four three CNBC. We see something Ed to mad money dot. CNBC DOT COM at fidelity you get value. You won't find anywhere where else decisions they're clear costs. They're lower than ever and account fees. There's zero so you can invest with zero trade offs open an account today at had fidelity dot com slash trading zero account minimums in zero counties apply to retail brokerage accounts only expenses charged by investments such as funds managed accounts and HSA's commissions interest charges or other expenses tremendous for transactions may still apply see fidelity dot com slash commissions for details fidelity brokerage services LLC MEMBER NYSE SIPC over the past month and a half. We've seen what happens when the most alluring group in the Wall Street fashion show suddenly goes out of style. I'll tell you about the high flying cloud based software stocks that have just been slaughtered in recent weeks. Some of these names been hit harder than others Z scaler. Was this wall over one hundred percent for the year. It's now it's up twenty one percent for the year the cloud cakes adobe salesforce service now spunk twilly VM ware workday. They're down on average. Eighteen percent from the highs of those only adobe and salesforce have shed less than ten percent now. I love many of these software service companies. You know that but this is why I tell you that you have to take some prophets Schnitzel. I caught in your biggest winners while you still have them. Momentum stocks can go from heroes to Zeros overnight especially because they all tend to trade together many abated together by should never been crafted as I told you before. I think there are two things going on your first. Many of these clouds sucks simply called way too expensive. That's that's why kept telling you to let them pull back for you. pull the trigger second. This market gut hit with a powerful rotation as money managers started feeling we're Bush about the economy they they sold the clouds stocks and they swapped in claims that can deliver gigantic earnings beat went commerce is strong the cloud. Hor can deliver great numbers even during a slow now now hit but if there's not gonna be a slowdown that makes their stocks less attractive in the eyes of Wall Street hence the hideous multi. We breakdown many of which stocks you've comment on in twitter quitter. I know you're depressed by it but maybe we can shed some light on which brings me the big question now that this has been bludgeoned half to death. What are we supposed to do? You got to remember with a few exceptions. The fundamentals really haven't changed at all. Our favorite cloud companies are still pretty up excellent numbers. The markets are starting to judge these numbers for much. It's more punishing prison which means we need to be more selective so tonight. We'll help you figure out which cloud stocks double down tweet this and which ones will maybe you gotta cut loose. Some of we know this. Cole Group has gotten a lot cheaper over the past six weeks but we need a way to distinguish between the high quality names that have been dragged down by the rotation and the lower quality names. That never should have been up in the first place when you make these decisions. You need to be ruthlessly logical. Not Emotional always check. The emotions sewer were in triage mode right now and that means. We need to be this objective as possible. That's why we put together a simple screener for the software as a service docs. We're GonNa run our whole cloud universe through through these filters wonders fundaments evaluation ending passes both filters my blessing to buy down down here after the big sell off basically doing a quick and dirty analysis cloud stocks to separate the wheat from the chaff and this is done by real portfolio managers every single day. I WANNA teach you ought to do it at home. It's a quick and dirty rule of thumb that Wall Street's been using to assess the enterprise software stocks for ages. No one's called. I've only heard once among our guests. It's called the rule of forty and it's quite simple. If you're running a software as a service company the rule of forty your distant forty says it's your revenue growth plus your profit. Margin should be greater than forty percent if it's blow forty year you're in trouble again. We're in motor. We want a simple rule. It tells us which of these clouds. SOx needs to be a potato from our portfolios. I like this will of forty because it recognizes that there are two ways to win win. The healthiest clouds socks read the growing very rapidly. Losing money or the growth is slowing but they've got increasingly strong earnings. If a company has a thirty percent revenue growth at a twenty percent improv emerge it passes the test if it's seventy percent revenue growth and in native twenty percent profit margin that also pass US however if you're only growing at a fifty eighty percent clip and you got a negative fifteen percent margin well wait a second. That's thirty five percent combined. It falls below are forty threshold like. I said it's a quick. It's quick and dirty way to look at this but this venture capital firms and hedge funds and companies themselves to assess the trade off between growth and profitability that we talk about every night here you're now. Let's put it into practice. Revenue Growth is straightforward member. That's just the sales lead but there are a lot of ways you can measure margins somewhat generous than others because we wanna to keep it simple. We're using the Ernie's for interest taxes depreciation amortization or ebitda margin so who passes a new fails all seven seven cloud kings past mostly the flying colors twitter. Leo How much should be like Twila twila highest scores companies has been to grow at a seventy two percent clip this year further bolstered by a ten percent Ebitda so this is our winner okay really terrific adobe. He comes in second with only a twenty four percent growth weight because this much more profitable with a forty four percent ebitda margin reports this week. I think it could be very very very good and it's Thursday now. After the cloud kings quality really starts to drop off our cloud princess lasting kupa software hub spot new relic out. They don't fares well. Neither new relic OCTA makes cut even before new relic disappointing forecast kissed this morning. They're slowing growth problem. Opt On the other hand is going to forty one percent cloud but it's negative nine percent ebitda margin drags it down so it doesn't is in deserve the praise at least on this method. Hey how about the rest of the cloud stocks. We've talked about pay com. Viva Systems speak ringcentral condensed. We've had them on five nine. Z scaler Mongo. DB SMART Cheat and a plan but we have happy less than half the make the cut using this year's analysts estimates pay com Viva Alter X. ringcentral and send dispatches POB Nine Keeler would pass on last year's numbers but they four little short on this year's estimates. Call out a pass to everything else. Were Cutting Hay. What about the cloud. IPO Smith Class Twenty nineteen soon soon video crowd strike Dina. Trae slack technologies pays your duty Free Zia tooth and software and cloud fair. We looked at thirty into stocks for this analysis and zoom video has the best score a zoom which helps explain why it's been such a great performance with them on this week. Even it's pulled back of late. Crowd Strike Passes Dinosaurs Dinah traced failed last year but it passes on this year's forecasts thanks to accelerating revenue growth or Argh. Everything else must go which brings us to the second discrete valuation again. We want to keep the simple so I'm I'm failing. Anything trades it more than ten times sales unless incompetent very good. Excuse ten times sales by the way very expensive is looking at the cloud kings adobe service now are both over the line of ten point four and eleven times next year's earnings next year sales and and I'll tell you I don't know if you saw but we saw some big moves of all the stocks but service now had the biggest but not cheap. I'm willing uh-huh Dobie a pass because it's so profitable sells for less than thirty times centers earnings estimates and that's fine by me. I like service now but there are no extenuating circumstances. You're traits sixty one times earnings not gonNA make it twenty hours a borderline case trading right at ten times earnings but giving his fabulous ruled forty square. I say we let let it stay in this group. As for the cloud princes of the remaining names both Atlassian and coupon sulfur both trade it well more than fifteen times sales lose hub spot is the only prince pissed both tests hub spot well okay. How can the cloud commoner's only five nine ringcentral Zendehdel traded less than ten times. It's actually your sales so we've got to be careful with the rest of them finally got remaining the IPO's crowd straight zoom video dinosaurs but crowd straight consumers still ultra expensive tritium more than twenty times since your sales. I don't feel comfortable wrecking recommending that to you at this environment bottom line when you try to be objective about the cloud socks the ones that you want to keep or Adobe salesforce spunk Twi- Leo VM ware Workday hub spot five nine rain central Zen desk and Dina trace everything else. What can I say need to be a lot more cautious. Perhaps more subjective reactive and that's not the best way to invest. Hey got your list. Stay Crame at Matthews Asia we uncover unique companies across Asia prime to benefit from consumer trends that brought her international funds miss find out what a dedicated allocation to Asia cannot add to your portfolio at Matthews Asia. Dot Com slash opportunity. The dust is central in the turmoil in the cloud space with many stocks bouncing today. Go back to the group or this show. I gave you Mike Triage analysis of all the cloud cover which ones you can double down on. Schwantz seemed little risky to me and now I WANNA come back to another software. Company is a service that the one that you've asked me over and over again since it came public last Friday. I got this so we can cloudflare. Clear is a cloud based web infrastructure play and it managed to rack up a decent. IPO price at fifteen then surging to eighteen at the open and staying there for climbing over three point five percent today strong strong stock so this face clouds stock be worth owning. I think we need to be very careful here about approaching new names frankly if cloud line if cloudflare had come public say just six months ago when cloud sucks red hot and it seemed to be no price investors wouldn't pay for these things. Maybe I would have felt a little more comfortable about recommending blatantly. This market's gotten a lot less hospitable court JAS. We accept it in the current environment. I think you need to steer clear of something like cloud flair and I know a a lot of like it don't get on the company has intriguing concept cloud platform basically helps businesses run their websites making them more secure enhancing the performance and the lamenting the cost and complexity of managing lots of individual pieces of hardware and the old days you get all these services from separate one premises software providers cloudflare Bunsen Mussa them all together into one easy to use platform that seamlessly allows you adopt additional solutions that so as the company sees it. They're aren't disrupting multiple large enterprise offer markets with the bungle approach the going after virtual private networks. VPN's internal and external firewalls web security distributed it denial of service prevention intrusion detection application delivery controls content delivery networks domain name systems advance swept prevent and wide area networking think of cloudflare's one stop shop is going for a parts of the cybersecurity and content delivery software industries. Put it all together. Management argues detect detect got a three thirty one point six billion dollar total addressable market. Tam that scoring forty seven billion by two thousand twenty two and that's without counting new new areas cloudflare's trying to expand into like storage five jeep the Internet of things. I mean say it does feel like it's got everything going forward now. They don't sell user data. They don't try to compete with their customers. They just give them a simple easy to use platform that can work with any major public cloud. Albinger cloudflare's neutral like Switzerland in fact someone say their little to neutral last month. This is preparing for type. They quote a lot of flack for providing infrastructure structure in security services for some of the ugliest destinations on the web including the site were number of recent mass shooters radicalized cloudflare drop them as a client right after the El Paso shooting but this wasn't the first time they'd gotten in trouble for doing business with the most hated parts of en- hateful parts the web so when I said they're Switzerland I mean that both the positive senses that concept works for me but what about financial okay cloudflare posted forty three percent sales those quote last year. That's a deceleration twenty seventeen although in the first issue that number reaccelerate forty-eight percent that's not bad how about the margins there's some moisture we'd like to see. Nia smooth trend but instead closer huge across the board improvement twenty seventeen better gross margin better pretty margin better free cash flow margin Paul by. It's a major deterioration last year in the first half of twenty nine thousand nine wardens have improved modestly so they seem to be back on the right track for the moment all the other thing. It's tough to get a read on cloudflare's free cash flow which appears to be going in the wrong direction after falling from negative twenty three million to negative seventy eight million last year. It worsened again down thirty eight thirty nine million in the first half of this year. That's decline versus the first half in two thousand eighteen. That's bad that said there are some real passes. CLOUDFLARE's paying customers grew by thirty eight percent last year and thirty three percent so far this year solid better still the number of customers paying them more than one hundred thousand dollars a year as going much faster up seventy percent in the first half mic sense part of cloud. Thurs pitches the easily scale help their business so if customers want to spend more. It's extremely easy for the company to give them exactly what they need but there's the problem when you compare cloud. Therre to the rest of the group it does indeed come up short. Remember that rule forty that I talked about. I mentioned earlier in the show. The Eddie here is that if you're a software as a service company your revenue quoth plus your profit margin should exceed forty percent anything you think below that threshold is suspect. The rule forty gives you two ways to win. You can lose a lot of money as long as you have. Rapid revenue growth or you can have slow revenue growth as long as you. You mean making a lot of money but you can't pass nibbling growth in not so at margin. I've already told you about the company passes tests but cloudflare it eight one of the company's going into forty eight percent clip but it's operating marshes negative twenty seven percent at the two together and you get twenty one percent we will get all the claus talks have gone public. cloudflare actually has the worst rule of forty score ensure cloud for may have a solid concept but in terms of his financial it lags behind the rest of the co- word now that would be fine if the stock at a sensible valuation but Jeez Clo- Clever sales for twenty eight times last S. cheers sales either. We assume it will keep growing roughly the same pace that means it's trading at fifteen times next year's back in the envelope sales forecasts that may they say pointing darn expensive stock. All our kings are cheaper salesforce adobe. VM where workday twitter spunk in service now so I I can't recommend cloudflare a pair bottom line if you got on got in on this cloudflare IPO and made a nice profit take good for you. I hope these guys can deliver spectacular numbers going forward that justify the stocks stratospheric valuation yes power lap Parabola but based on cloud thirst. I inconsistent results over the past eighteen months stocks just too risky for me especially in the market no longer worships at the altar of the cloud. Let's go to Jackie in New York Jackie. Jim Thank you for your recommendation over rising until people maybe over ten percents that's nice. Thank you well listen. The question tonight is chewing so I got an on. IPO Day at thirty eight August stock has been trading down there. It said Yeah with earnings coming out post markets tomorrow. Do you think I should cut my law so we'll wait for earnings rescue the stock well look we we think chewy is a great concept okay and so therefore you don't. WanNa trait in now in flint and when it comes to Chewy do I note this quarter is going to be good or bad. I have no idea but I do like the concept very much. Let's go to Jerry in L. Annoyed Jerry Jim Bouillabaisse Jer as a former marine. We say who are so who is to you and your team the fine show and dedication to the small investor well. Thank you and thank you for serving. Thank you very much great early. August you recommended health help. Catalyst Brian recently launched them feel. She's happy off your very high on their strategic plan to provide a complex analytic ah to the healthcare industry which sounded very promising to me as well so after doing some of my own research and after the stock dropped nine percent from its high of forty the united forty nine dollars. I took a minimal position of forty fi ten okay but early in August stock dropped thirty the thirty three dollars twenty seven hundred twenty seven percents client since it's me back up about thirty seven dollars today but it's still it's eighteen not for me onto right okay. Jerry look. I think this is a really good company. I think these stocks really got hammered all them. It's just like a giant group move but that said I think I'm reiterating. I think south catalyst is a terrific company. I think you'll do just fine no me to buy anymore more and let's see breaks that low that it ten of thirty two dollars thirty seven now if you meet some money on on cloud fair. I say good for you but these guys are just too inconsistent for my liking. There's money had looking for an easy way to access the nine trillion dollar gold market. I'm talking to an under the radar copy hoping to help then there are two deal staring us in the face and they are worrisome to the entire market the point them out. Tell you how to coach and all your calls rapid fire tonight's edition the lightning rounds so stay with Kramer and tomorrow kickoff the trading day was squawk on the street live from post nine at the NYSE. What is this on a podcast when you do this podcasts is doing with being now. I was just be out with ow fun Monday morning. Thing it all starts ninety m eastern unnerving weekend. Kim were somebody bond. Saudi Arabia's oil infrastructure send the price of crude Sorek knocking down the averages into appreciate the value having some gold in your portfolio. I've been pushing for precious. Metal's for months. Now isn't sure against economic chaos. Hey It's worth from thirteen hundred dollars. You're just under fifteen hundred right now. Regular viewers know I like Barrick Gold Old Nico Equal minds or the G. O. D. and that's an ETF that mirrors the action physical commodity but tonight. I've got a new more modern way to play it. I'm talking about a privately L. Company called Passos at Holes and safeguards both physical and digital assets passes created a product packs goal which is a token is version of precious metal digital digital asset that represents real fiscal gold Helton's triplication but with all the portability of digital preschool the world crypto currencies and digital assets but taxes seems going about this the what they're listening this legitimate vendors to take custody of their physical gold and price of that gold is the the basis for the tokens value. It's not the crypto currency trading trading sentiment so let's take a closer look Charles guerrilla. He's the CO founder. Sheila Paxos get a better sense of how this whole thing works Mr Griller. Welcome the MED money. Good soocer have a seat. Thank you so much all right so I tell people buy gold stocks. I tell people by the G. O. D. Why is your method of versus. Say The ged. Let's say maybe more true to the price of gold yeah so it's really important to realize with gold and really almost any commodity that either you can make really tradeable or you can own the underlying right but it's hard to have both so futures gold. ETF's you're not actually owning the underlying gold and that's not a problem as liquid equities tradeable but at the same time if you want to have the real thing you're gonNA have to go buried in your backyard and then when it comes time to unbearable because you WANNA spend it. You don't know if that's real gold so we've tried to solve solve that problem. Square that fundamental contradiction so packs gold is real unique. One token equals one ounce of gold and relates to a bar in brinks in London all way down to the serial numbers so you actually have real gold able to move around just like the G. L. D. or the futures market but yet you have the underlying actual well. How do you guys make bunny well. Well we make money and actually we don't make money from custody fees so actually that's really cool. There's no minimum to buy it. You can hold it with us. We make when you buy yourself okay because that's important important people with someone at my high school you this week in buried in the backyard said look you. That's the safest place I said wait. A second. Someone could steal that they might see word is but I said why not a safety deposit box. This is less expensive than safety deposit back exactly so we have a really great rate with brink's. It's really credible credible walt everyone's heard of ranks but there's only six volts in London that you store golden and eighty percent of the golden the world trade in the spot market so this is institutional grade vault that everyone in this world uses and it's opened a retail so that's really cool. We tried to build it so that's institutional grade but available for retail and for institutions so let's let's say. I know that I tried to buy some gold and it's a lot per per ounce at a lot of people balked at that. What's the small amount that you can buy. We use paxos yeah so we we go down to really. There's no minimum but we recommend you buy like a tenth of an ounce. Okay so that's basically you know one hundred fifty dollars minimum at today's prices and so anyone can get in by now hadn't been others have tried this and failed yeah. I mean I think what's really unique about Paxos is that were a trust company so we're regulated just like a bank and the reason that's important is you're not just trusting. Ask because we say you should trust us because we're regulated. We have oversight and so unlike anyone else. This actual token itself is regulated was approved by the New York Department of Financial Services. which is the banking regulator in New York so you're not just trusting us? We have regulatory oversight. We have an independent board auditor. We try to take all the boxes so this isn't just something that safer retail safer institutions to okay so we're the terms crypto and blockchain. We start thinking well. Wait a second. That was something that got everyone excited and people lost money on Crypto what is crypto and blockchain when it comes to taxes yeah. I mean I think if you think about blockchain. It's everyone talks about of recklessly. It's like this you know super short topic but it's really just a database and so when you say hey we put gold on a blockchain what we did is we put it on a distributed database and the beauty of distributed databases. Anybody can access it so you're not reliant on on paxos or anyone else to be able to move your gold around once. You're on the blockchain you send anybody else who's on that same blockchain with. You and that's what we're trying to do is use the power of database upgrade if you will as opposed to crypto which is a little bit different. I like you too but it's a completely different thing altogether because you're just owning the database okay so let's say Jamie Dimon. I'm watching the show and I say you know that guy cast grill. He's got a real good idea. I'm going to go do paxos. I'm going to do the same thing. What's keeping someone else from doing what you're doing. Well really there's nothing. There's no reason anyone else couldn't go do it. It's just a question of can you do it meaning. Do you have the engineers. Do you have the technology. Have you thought about how to create innovative products and so anybody can do that but I think what's native about. paxos is one word trust company so a regulated bank but to you know half. Our Company is product doc nearing. We're really a technology firm at heart and so we're trying to give you the confidence of a bank but the innovation of Silicon Valley and that's just different from I think most institutions that in the banking world today well look. I'm pro goal this another way to buy gold people to think about it and stop worrying that it's over fourteen hundred dollars. That's too expensive. Here's another way to play fled. Charles cast guerrillas the packs of sense of privately traded company but obviously you can buy Golden. What I think is a very secure way. They have monies back into the ring. It is premature talking and then the leg wounds over. Are you ready scheme with Bob Bob Hi Jim from her Sunny Hermosa Beach California how you doing I love Hermosa Beach. Hey Jim two weeks ago. ULTA beauty had disappointing earnings in the stock bill over one hundred dollars a share since then. It has lost another ten dollars a share. Is it safe to buy it now Kebab. The problem was the data analyst that Cole had a lot of analyst very angry and a lot of people given up on the company I have not I think it's within ten percent of a bottom. I've been wanting to wait. I wanted to wait until we see the next quarter but I'm okay with another twenty points and I'm fine with it. It's going to bill in Florida the bill. Hey Jim this is bill from Saint Augustine Florida Arial on a city around what's going on. Hey I I've got a question about a DVD Davita the large one of the largest dialysis providers in the United States and sex cover strong by John however they're down from their fifty two week high however today they were up a point a quarter right your oppression about the he gets very very good company. You know it is it's Dan a lot from its high but it's profitable. It's not expensive. I'm going to say bye to beat Tyler Texas Tyler her big Jim Cramer from Houston Texas. How you doing buddy all right. How about you. I'm doing well though on on my way to work this morning. I stop McDonald's to give me a make griddle stuff that we're about six percent off of. Those time is back in August. I JUST WANNA know. What are you think about it? I saved by Scott down a little bit last week accounting issue that wasn't really bad and now before saying doesn't do well in a higher gasoline. That's crazy. It's exactly you go. I think you by McDonald's how about Matt in Texas Mac big. Jim Amount well all right. Hey what do you think about the company at Kupa. Stuff were were around town a couple of weeks boy. Did they tell a great story expensive stock in his Cohen. How are we going to Joe in New Jersey Joe. Hello Kramer always a pleasure and the author could spark thank you what's going on recommended. Valley National Bank about two years ago yeah so own. It Shit got a hold on just four percent yield. I know it's not doing much but I'll tell you when they curve gets back again. You're going to feel good about a very well run bag kid. I like it okay. Let's go to John Pierre Kim Jong Pierre Mister Kramer caller big buoy. Oh yeah from me and my friend Photo Cody Gee I think about Cleveland Clinic too risky here worldwide slowdown I do not I want to go to Cleveland cliffs and whose life is sponsored by to deal mirror drew yeah. Sometimes I wish there was such such a thing as a buyer strike. I wish we could reach a point of Volgin with IPO's with the underwriters. Just say sorry. We aren't going to do this. Deal the savvy. That almost never happens because there's just too much money above the say. No the fees are great right now. We're staring down the barrel of two hideous deals that could be damaging to the entire hire Morgan the first we work or the week company or whatever the call themselves right now. Here's the company that is quite simply desperate for money they can raise three billion in European. They could also perhaps score a sixteen dollar loan. We worked needs all the caching get because they are losing money hand over fist. Unfortunately this is one of those deals that let's just say raise eyebrows the corporate governance stinks to high with some truly outrageous examples to self-dealing the most egregious the flamboyant CEO Adam Newman who's who's actually quite fun to be US got. We worked to pay spy point nine million in stock partnership control in exchange for the trademark the new name the week company I can't I believe we work with a great need changes to something much worse. The we copy sounds like it was coined by five zero say found a way to profit from it on the side. Fortunately Newman returned the compensation but that kind of behavior really makes me wonder about the ship style. There are words to describe this kind of thing. I just can't say them on basic cable worse some of the Wall Street Journal reported that new minute already cashed out at least seven hundred million dollars by selling shares or borrowing against them can't believe this okay see you as a cold or stocks book both after the IPO is maybe even by some and even know what seventy Yo sell stock before the IPO and word financial seem kind of crazed numbers are supposed to be straightforward but they're using bizarre metrics. They adjusted earnings before interest taxes depreciation amortization increase investments. There's a real estate company for Heaven's sake if they're growing fast. How can that be included. Are Pretty expensive now. Wonder we work the ultimate ultimate Unicorn a company got a forty seven billion dollar valuations last round of private fundraising is now talking about doing ten to twelve billion dollars valuation for the IPO incredibly incredibly the company's trying to fix some of these issues on the fly and the company has fabulous revenue growth. I will give it that so it could be attracted. Real growth hounds out there however I don't really care about we work itself. What bothers me. Is the investment bankers trying to jam this deal down. The throat feels like mutual funds hedge funds and the individual investors are helpless to stop it. That's a problem we work could hurt the entire market if it bombs what about the other potentially damaging. IPO Saudi Aramco the stories to express an interest in floating shares of the National Oil Company and what would be the largest initial public offering ever tax. I can't think of a worse opportunity. I'd expect evaluation in excess of a trillion dollars. That's what they're talking about which would flood the market with new stock. Even if only they floated a sliver outer. That's not what we need right now but the best we can hope for forced postponement at the end of the day. If you want the averages to go higher then it would be great if the investment because we just started doing these crummy deals of course that won't happen because they I don't want to give up. Their underwriting fees greed the going to do these. Unattractive deals hope they at least price them low levels enough to make the stocks enticing throat hurt the market get but even that won't happen unless big accounts pass when either piece of merchandise looked every bit of merchandise out. There has a level where it's worth by. I I just think the levels for we work in Saudi Aramco actually are much lower than either so we're unlikely to get reasonable prices for the buyers. If these deals aren't priced just a cheap levels I expect the market to get hammered on the days. They come public. What can you do have. We stopped participating low quality or high risk pews. How about we including you big money manage out there. Tell them we don't want these deals at any price that's about the only thing that will put a stop these extremely sub optimal the bowl and ill advised IPO stick with credit tonight order all new American greed said thirty million dollar house flipping scam run by a reality TV star but when his lies only unravel esteemed gets cancelled old and unwitting partner winds up dead don't miss it tonight at ten only on CNBC okay. We got some equity offerings tonight. Bunko which is no this this of cool when we liked that and shop another we like but we don't like to seem big epilogue breaks. That's often a sign of too much supply and I regard that is quite worrisome. Even though I liked Bunko I like shopping. I like to say there's always a bull market summer and I promise started finding just right here money. I'm Jim Criminal. We'll see you to ooh morrow. I'm David favorite join me. Croak into me and Jim Cramer for the opening bell our of CNBC squawk on the street the the podcast subscribe for free wherever you listen and you can always catch us live weekdays at nine A._M. Eastern C._N._B._C.

Coming up next