TSLA, AAPL, FIT: Jim Cramer's Views
Jim Cramer shares his views every day on RealMoney.Click here for a real-time look at his insights and musings.
Cramer: Why Apple Cannot Get Away With What Tesla Can
Posted at 7:19 a.m. EDT on Thursday, May 5, 2016
Some guys can get away with financial murder. Other guys can't get away with anything. And still other guys think they can forecast wild changes every three months and still have credibility, when they most certainly deserve -- and now get -- none at all.
Welcome to the world of Tesla (TSLA) - Get Report , Apple (AAPL) - Get Report -- which is a component of the Action Alerts PLUS portfolio -- and Fitbit (FIT) - Get Report , where Elon Musk can say whatever the heck he wants and get away with it, Tim Cook has to watch every last word even as he has repeatedly delivered the goods and James Park -- who seems to think that guidance is for idiots, or at least idiot analysts who follow the company.
At any given earnings season, we have people and analysts who really press the envelope and go for total outrage. But we have never seen the likes of Elon Musk in our lives. Musk makes a total mockery of the process, picking numbers that suit him, and is not the least bit concerned about the consequences of being wrong.
First, he produces a quarter that is in line, meaning that he's losing about $19,059 per car, near a record high -- thank you, Anton Wahlman, for that calculation.
Second, even as he doesn't even make the number of cars he promised for the quarter -- 17,000, below the 19,000 that analysts were expecting -- he's now projecting he will make 500,000 cars by 2018 and a million by 2020.
His transparency is shameless. While he boasts the seemingly impossible -- and I put "seemingly" in there because otherwise I am just calling him a liar, and I think he believes the numbers -- he uses the forecast both to urge you to send more to him and to raise more money from Wall Street.
Who else but Musk could say: "If you place your order now, there's a high probability you will actually receive your car in 2018." He's using the darned projection to sell cars! And then he uses it to give himself a chance to, and I quote, "raise some combination of equity and debt to make sure the company has a good buffer of cash on hand." That way, he says, he's de-risking the company.
I think he should raise all of the money he can to be sure that Donald Trump's defeated, because without government subsidies he might as well file for Chapter 11 right now, with those plans.
Yet, he gets away with it. Why, you ask? Because of demand. Elon Musk can say and do anything, because he has demonstrable demand for his product. Those deposits from thousands upon thousands of people are a fraction of the real demand out there. I am surprised he doesn't offer variable deposits so you can pay the whole thing first to get at the front of the line.
Then there's Apple and Tim Cook. Cook forecasted almost perfectly for the quarter just reported. Yet I defy you to find more than handful of stories that didn't typify the quarter as a huge shortfall. It was right dead in line, for heavens' sakes.
As for the forecast? What was Cook supposed to do? Make up one that showed better numbers than he can deliver? Given what he has in the pipe, and what he can see, barring a surge of orders for the new iPphone SE -- something that's entirely possible if you extrapolate comments from supplier Qorvo (QRVO) - Get Report last night -- he had to do what he did to reset growth for the quarter.
But he wasn't going to give the analysts what they wanted, which is a pre-packaged Apple iPhone obituary. So somehow the "community" was disappointed. Well, excuse Tim Cook for believing himself. I guess making $10 billion in a quarter gives you some confidence to do so.
Fitbit? What can I say? Park should be banned from making any projections. His stock would be a heck of a lot higher if he were. Here's another one where the headlines are saying he had a shortfall. Wrong. The quarter was huge, much better than expected.
The guidance, however, was inexplicable; as inexplicable as the previous quarter, when he slashed projections dramatically and then crushed them last night. That's right; going into last night's quarter, he had guided down from $0.23 cents to zero to $0.02. So $0.10 was delicious, except he then took next quarter to $0.08 to $0.11 from $0.26.
In reality, these numbers mean nothing to him. In fact, he boosted the year's forecast. My advice: just make the damned product and shut up. Your stock would be going higher, not lower today. But I guess he just can't help himself.
What's the bottom line here, though? When you have too much demand, you can say anything. When you don't have enough demand to meet supply, it doesn't matter what you say, you will be disliked. And if you can't gauge demand or supply? Then, just stop talking, will you?
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL.
Cramer: These Service Streams Are Worth the Money
Posted at 2:13 p.m. EDT on Tuesday, May 3, 2016
You know what the Holy Grail of revenue is? Service revenue that you don't mind paying because it represents a valuable asset that you can't live without. You don't jump up and down and scream like it is a tax or some sort of bill you resent shelling out hard-earned money for. Hence, why I used the term "asset" rather than a cost.
Who has that service stream that I think is an asset and not a cost? How about Costco (COST) - Get Report ? I am proud to be a Costco member. I regard it as one of the great breaks of all time, and if I have spare time and there is a Costco, I am going to it. The other day I was going to the White House Correspondents Dinner and my wife, Lisa, said my wallet was too stuffed and it looked terrible and wrecked the tailored tux look. I took it out of my pocket and pulled out a bunch of stuff and showed her how I had made it thinner.
She said it wasn't thin enough and she grabbed it, opened it and immediately asked, "What the heck, why are you leaving your Costco card in? You're not going to Costco tonight." I said I am never without my Costco card and I am not going to start being without it tonight. I left it in and took out a bunch of ones and fives. Let's call it brand loyalty.
The second one? Netflix (NFLX) - Get Report . Memo to CEO Reed Hastings: I would easily pay double for it. Why not? It is a ridiculous bargain given how much I love the original content and I am addicted to all sorts of their shows, not just the famous ones.
I don't know how much I pay for Amazon (AMZN) - Get Report Prime, but that's a revenue stream that's an asset beyond belief. I showroom a ton of retailers and then use Amazon Prime. I no longer walk across the street to get toilet paper or paper towels. Too bulky. Amazon Prime. Gladly pay much more for it. (Amazon is part of TheStreet'sGrowth Seeker portfolio.)
And now another revenue stream appears on my email and it, too, is an asset. My service stream from Apple (AAPL) - Get Report . One of my family members recently lost his iPhone. He hadn't backed up his pictures. He's out his pictures and it's miserable. A total loss. We have billions of pictures. So we pay for iCloud backup. Who cares how much we pay? We've learned the lesson. It doesn't matter, get the backup. (Costco and Apple are part of TheStreet'sAction Alerts PLUS portfolio.)
Apple's got a family music plan. I get it. I don't know how much it costs. I asked my wife today before I wrote this. She told me. I said I'd pay more. It's an asset.
Last night, CEO Tim Cook talked about the service revenue stream and how it is growing like a weed, greater than 20%, and how one day people will pay up for Apple's stock because of that stream. There are a billion Apple devices, a number that's going to grow and grow, whether it's because lots of people are buying the latest iteration, the SE, or the 7, or whatever else is out there. When you buy that device, the relationship with Apple doesn't end, it begins, and it includes the assets you pay for. It's like the razor I buy from Gillette. I pay a fortune for the blades, too much frankly, but not to value Gillette for that stream is just plain stupid. It's where the money is.
You know what? It is no coincidence that I like every stock I just mentioned here. Service revenue is recurring, predictable and lucrative. Apple joins Costco, Netflix and Amazon, with assets that I pay for without thinking about it, because of its value.
One day people will realize that you can't value Apple only for the device. But by the time they realize it, I think Apple's stock will be higher, not lower, because we will put a big value on that stream. If you don't think so, if you think it's just a dodge that the company uses to hide a slowdown, trade out of the stock. Don't bother me. However, as is so often the case with this company, right when people are losing faith, something new comes along that you can't live without. To me, the stream's another reason to own, not trade, the stock of the largest company in the world.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long COST and AAPL.
Cramer: We Are at the Mercy of Oil
Posted at 11:04 a.m. EDT on Tuesday, May 3, 2016
If you live by the oil sword you die by the oil sword and right now we are dying from it.
Oil being down plus the hangover from the Warren Buffett lovefest, a hangover that has almost always led to a decline, are both being fingered for the selloff and all I can say is "of course."
We are in an odd time, one where a commodity supersedes pretty much everything and it goes down or goes up pretty much on a whim.
This time the whim is an ever so slight increase in OPEC production coupled with an ever so slight reduction in Chinese manufacturing growth. The two are combining to bring everything down, even as the China data is a small and somewhat meaningless private PMI figure and OPEC, even with that overage, is most likely not meeting the demand.
But it doesn't matter. Until oil ticks up the market can't rally.
There's really nothing more to it.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
, which Cramer co-manages as a charitable trust, is long COST and AAPL.
