Don't Bet Against the Bulls: Cramer's 'Mad Money' Recap (Thursday 12/10/20)

Despite the IPO euphoria, the backdrop to this market is just too optimistic to bet against the bulls, Jim Cramer says.
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It's a stretch to say the market is dirt cheap at these levels, Jim Cramer told his Mad Money viewers Thursday. But the backdrop is too positive to bet aggressively against the bulls, Cramer said, because shorting the market is even crazier than buying in at these sky-high prices.

Euphoria is how the stock of Airbnb  (ABNB) - Get Report was able to double on its first day of trading, Cramer explained. And Airbnb follows DoorDash  (DASH) - Get Report Wednesday and a host of others, like Snowflake  (SNOW) - Get Report, earlier in the year. These red-hot companies simply don't know what they're really worth, and the hordes of optimistic, younger investors don't either. High-flying stocks like Tesla  (TSLA) - Get Report have become the bellwether for these younger investors and each new IPO is held against that standard.

At the end of the day, the IPOs of both DoorDash and Airbnb were priced incorrectly, Cramer said. The underwriters should never let these stocks open at such exorbitant prices, knowing that shares will likely fade as the euphoria dies down. Investors almost always get hurt buying into hot IPOs with market orders, which is why he always urges using limit orders to cap your risk.

But with such strong market momentum, Cramer said he wouldn't sell everything, or short individual stocks. Instead, he advised taking profits on your biggest winners and letting the rest run.

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Executive Decision: Stitch Fix

In his first "Executive Decision" segment, Cramer spoke with Katrina Lake, chairperson and CEO of Stitch Fix  (SFIX) - Get Report, the online shopping service with 3.8 million members. Shares of Stitch Fix are up over 130% for the year.

Lake explained that the metric that matters most for Stitch Fix is their success rate, which they calculate as the items customers decide to keep from boxes that get sent to them. Using a combination of personal stylists and 10 years of data science, Stitch Fix has been able to achieve an 80% success rate on a customer's first order and is continually improving the success rates thereafter.

When asked why more people don't know about her company, Lake said that when you have a radically disruptive service like Stitch Fix, it takes a while for customers to truly comprehend the difference. Stitch Fix isn't a website where you search blindly through millions of items. The service only ever shows you the items they've determined are perfect for you.

Turning to the pandemic, Lake admitted that staying at home means consumers have less need for clothes but, she said, being at home is also the perfect time to try a new, at-home shopping service that saves you a lot of time.

Executive Decision: Edwards Lifesciences

For his second "Executive Decision" segment, Cramer welcomed back Mike Mussallem, chairman and CEO of Edwards Lifesciences  (EW) - Get Report, the medical device maker with shares up 4% over the past week.

Mussallem said that 2020 has been a very challenging year for medical device makers. When COVID-19 first hit, hospitals stopped all elective procedures to make room for the pandemic. But as we learned more about COVID, procedures gradually reopened, only to find patients are now too scared to reenter the healthcare system. Despite the tough times however, Mussallem sees the end in sight as vaccines begin in earnest.

Edwards Lifesciences continues to be laser-focused on their patients, Mussallem said. They continue to advance their technology, invest heavily on research and development, and serve those patients who are being underserved.

"Our employees have done an amazing job this year," Mussallem concluded.

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SPACs, EVs -- Too Much of a Good Thing?

Just because a stock goes higher, doesn't mean it should, Cramer reminded viewers. A few weeks ago, Cramer highlighted some electric vehicle startups that were coming public via reverse mergers with special purpose acquisition companies, or SPACs. But now, Cramer said this group has gone parabolic and it's time to sell.

Solid-state battery maker QuantumScape  (QS) - Get Report was first on Cramer's list. He said this stock now trades for 10 times 2027 sales estimates, which is ridiculously high. He was equally bearish on LiDAR-maker Luminar LAZR, which he liked at $18 a share and likes far less in the mid-$30s. Shares of Luminar are now trading for 14 times 2025 sales.

There are two more EV-related IPOs coming. Cramer said that Arrival will soon be merging with CIIG Merger  (CIIC)  and that stock has become too pricey as well. Finally he said that the coming Canoo is equally overpriced.

Prices do matter, Cramer concluded, and it's possible to have far too much of a good thing in your portfolio.

Give 'em a Break, not a Breakup

In his No-Huddle Offense segment, Cramer opined on the recently announced antitrust case against Facebook  (FB) - Get Report. He said according to the suit, the social media giant has been stifling competition by buying up rivals like Instagram and WhatsApp, turning it into a monopoly with unlimited power.

The only problem? The people bringing this suit are the same people that originally approved the acquisitions of Instagram and WhatsApp.

Cramer said America's antitrust policy has been a joke for many years. It is only invoked selectively and often only for political reasons. Who is Facebook really hurting? What damage to advertisers have they done? And most importantly, what's changed from the time when these deals were first approved?

Even if you think Facebook is a monopoly, Cramer concluded, this is the wrong way to handle it.

Lightning Round

Here's what Jim Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Thursday evening:

CVS Health  (CVS) - Get Report: "I think this is an excellent stock."

AquaBounty Technologies  (AQB) - Get Report: "This is an interesting story and it's hot."

Cheesecake Factory  (CAKE) - Get Report: "They had a good quarter and they are an essential restaurant. It's a decent place to be."

FuboTV  (FUBO) - Get Report: "If you want entertainment, you want Walt Disney Co.  (DIS) - Get Report."

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At the time of publication, Cramer's Action Alerts PLUS had a position in CVS, DIS, FB.