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Flurry of Deals: Cramer's 'Mad Money' Recap (Thursday 9/17/20)

Jim Cramer explains why some buyers apparently don't care how much they're paying for these high-flying IPOs, and what that means to the market.

As long as the IPO deals keep flowing, the high-flying tech stocks will keep getting hit, Jim Cramer told his Mad Money viewers Thursday. In the aftermath of Wednesday's anticipated IPO of Snowflake  (SNOW) - Get Snowflake, Inc. Class A Report and JFrog  (FROG) - Get JFrog Ltd. Report, Cramer said one thing is clear. The buyers of these stocks have lost their minds.

The IPO cycle is nothing new or mysterious, Cramer explained. Money managers receive their allotment of shares, but are always forced to complete their positions in the open market. This creates a lot of initial demand that ensures an opening-day rally if shares are priced correctly. Fund managers won't flinch at paying $180 a share for Snowflake, for example, because their initial shares were priced at $120, giving them a combined cost of just $150.

But these money managers don't have unlimited resources. They must sell something they already own in order to buy into the latest deal. That's why the Nasdaq fell Wednesday -- as investors sold across the tech sector to make room for Snowflake and JFrog.

Cramer said this cycle will continue with the wave of coming tech IPOs, none of which will be as high quality as Snowflake, which has the backing of Warren Buffett and Marc Benioff of  (CRM) - Get, inc. Report. But that doesn't mean the markets are in for another dot-com collapse like we saw in 2000. Back then, the market was a very different animal.

Cramer said he'd used the overall market weakness to do some buying, but not in tech. He prefers picking at the many non-tech stocks that have begun to fall as the markets digest these new offerings.

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Home Sweet Home Office

In his No-Huddle Offense segment, Cramer opined on the staying power of our stay-at-home economy. He cited four recent points that show working from home is not a passing fad.

First, Cramer said cloud storage provider Box  (BOX) - Get Box, Inc. Class A Report is seeing strong tailwinds as more people continue to set up shop in their homes. Second, Campbell Soup  (CPB) - Get Campbell Soup Company Report is adding capacity to address supply constraints so the work-from-home crowd will have all of the hot soup and snacks they need for a long winter at home. Third, high-end office furniture maker Herman Miller  (MLHR) - Get Herman Miller, Inc. Report told investors that it, too, is seeing continued strong sales and home offices across the globe are being outfitted. Finally, home builder Lennar  (LEN) - Get Lennar Corporation Class A Report told us earlier this week that consumers are still flocking to the suburbs and buying homes with plenty of new home offices.

Cramer said companies have quickly learned that it's cheaper and safer for employees to work from home. Why would they want to bring them back when office space is so expensive to maintain? Without a vaccine, bringing workers back is a risk, but even with a vaccine, it might not be economical.

Don’t miss Cramer’s best, every day, with fast, actionable strategies: StreetLightning.

Know Your IPO: Amwell

In his "Know Your IPO" segment, Cramer highlighted today's IPO of American Well Corp., also known as Amwell, the telemedicine provider that's been in high demand ever since the pandemic got underway.

Cramer said he's been a long-time supporter of telemedicine with companies like Teladoc  (TDOC) - Get Teladoc Health, Inc. Report, which is now merging with Livongo Health  (LVGO) - Get Livongo Health, Inc. Report. Amwell is another terrific telehealth provider, with 77% revenue growth that's accelerating and monthly visits that have surged 400% since the pandemic began.

There's a lot to like with Amwell the company, Cramer said, but Amwell the stock, is a different story.

Cramer said he liked the company at its IPO price of $18 a share, but when the stock opened at $25, that made it a $6 billion company trading at 21 time sales, not earnings. Like many recent IPOs, Cramer said the valuation just isn't warranted at these levels and he cannot recommend it. Rival Teladoc trades at just 16 times earnings for comparison. If shares pull back below $18, however, Cramer said he would be a buyer, as telehealth will be a big part of the new healthcare landscape, even after COVID-19 has passed.

Executive Decision: Proofpoint

In his first "Executive Decision" segment, Cramer spoke with Gary Steele, CEO of Proofpoint  (PFPT) - Get Proofpoint, Inc. Report, the cybersecurity company that's been lagging its peers with shares off 7.4% for the year. Proofpoint has implemented a $300 million stock buyback program in an effort to stem those losses.

Steele said he's proud of what his company has accomplished and cybersecurity is more in demand than ever. He said the work-from-home trend has changed the face of work and companies are adapting to the new blended way of working from the office and remotely.

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When it comes to cyber security, Steele said that data doesn't walk away by itself. There is always a human involved in the process and that's why Proofpoint takes a people-centric view of protecting employees from phishing scams.

Phishing attacks are more sophisticated than ever, with emails appearing as the real deal. That's why Proofpoint is giving its customers more visibility and control into what's happening in their network and is using the latest in artificial intelligence to spot fake emails before they're delivered.

Betting on Sports Betting

For years, the hottest story in the casino industry was Macau. But as President Trump kicked off a trade war with China, the greatest gambling story of all time came to an abrupt end. But as shares of Las Vegas Sands  (LVS) - Get Las Vegas Sands Corp. Report have fallen 29% for the year, and rival Wynn Resorts  (WYNN) - Get Wynn Resorts, Limited Report has lost 42%, there is a new story in the casino industry and it could be even bigger than Macau.

Shares of Penn National Gaming  (PENN) - Get Penn National Gaming, Inc. Report are up 185% in 2020 and Cramer said even at these levels, the stock is still cheap. That's because Penn has taken a 36% stake in Barstool Sports and is rapidly becoming the leader in sports gambling. Cramer spoke with Jay Snowden, president and CEO of Penn National, who said that they are reimagining what they do and how they do it. By making structural changes to how sports betting happens, they have a transformational opportunity.

Erika Nardini, CEO of Barstool Sports, said the combination of the two companies is making gambling part of the sports culture and they're growing in leaps and bounds as they do 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:

NextEra Energy  (NEE) - Get NextEra Energy, Inc. Report: "I like that one, along with Consolidated Edison  (ED) - Get Consolidated Edison, Inc. Report and American Electric Power  (AEP) - Get American Electric Power Company, Inc. Report."

Peloton  (PTON) - Get Peloton Interactive, Inc. Class A Report: "I think this one has run up way too far. "

Fulgent Genetics  (FLGT) - Get Fulgent Genetics, Inc. Report: "I'm an old-fashioned guy, I like Abbott Laboratories  (ABT) - Get Abbott Laboratories Report and Thermo Fisher Scientific  (TMO) - Get Thermo Fisher Scientific Inc. Report."

LM Ericsson  (ERIC) - Get Telefonaktiebolaget LM Ericsson Report: "No. You want Marvell Technology  (MRVL) - Get Marvell Technology, Inc. Report."

Hannon Armstrong  (HASI) - Get Hannon Armstrong Sustainable Infrastructure Capital, Inc. Report: "I don't know who they lend to, so I'm going to say no thank you."

Splunk  (SPLK) - Get Splunk Inc. Report: "Splunk is pretty good and it has a lot of things going for it."

Clorox  (CLX) - Get Clorox Company Report: "Clorox needs some time to come in a little, but this is a fabulous company."

Vale  (VALE) - Get Vale SA Report: "Mining is having a boom, but I think that Freeport-McMoRan  (FCX) - Get Freeport-McMoRan, Inc. Report is better."

The Trade Desk  (TTD) - Get Trade Desk, Inc. Class A Report: "I'm afraid that this is the type of stock that will get hurt by the flood of IPOs."

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At the time of publication, Cramer's Action Alerts PLUS had a position in CRM, MRVL.