The avalanche of IPOs is really hurting the stock market, Jim Cramer told his Mad Money viewers Friday, after another down day on Wall Street. Cramer reminded viewers that the market operates on supply and demand, and right now, the new supply from IPOs like Unity Software is overwhelming demand, and the whole market suffers.
Cramer's game plan for next week's action begins on Monday, when we learn if there is a deal to buy TikTok after President Donald Trump's ban of the social media app on Sunday. The Trump administration is scheduled to begin banning downloads and use of popular Chinese-owned apps TikTok and WeChat late Sunday.
Next, on Tuesday, we get earnings from AutoZone (AZO) - Get Report, Nike (NKE) - Get Report and KB Home (KBH) - Get Report. Cramer said he'd buy some AutoZone ahead of the quarter and more after the company reports. He was also bullish on Nike's direct-to-consumer business and remained bullish on housing.
Thursday will be the big earnings day of the week, when we hear from several Cramer favorites including Accenture (ACN) - Get Report, Jabil Circuit (JBL) - Get Report, CarMax (KMX) - Get Report and Darden Restaurants (DRI) - Get Report. Cramer was also bullish on Costco (COST) - Get Report, telling viewers to wait until after the company reports to buy on weakness.
Finally, on Friday, we'll get a read on the economy with the latest durable goods orders. Cramer said he expects the number to be good and confirm what FedEx (FDX) - Get Report told us earlier in the week, that commerce is picking up.
Cramer and the AAP team are looking at everything from earnings and tariffs to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.
Know Your IPOs
After a huge week for IPOs, Cramer used his "Know Your IPO" segment to weigh in on Unity Software, the video game platform that powers almost half the games in the Apple AAPL App Store. Shares of Unity priced at $52, opened at $75 and closed its first day of trading just above $68.
As with all of this week's IPOs, Cramer said Unity, the company, has a lot to like. The game maker has a total addressable market of $29 billion, thanks to its offerings in gaming, architecture, media and automotive. It has incredible revenue growth of 42% and mind-blowing gross margins.
But, as always, it all comes down to price. At $68 a share, Unity is valued at $18 billion, or nearly 24 times sales. "People, you can't pay that," Cramer exclaimed. Unity fails his "Rule of 40" test, which says a company's growth rate plus its gross margins cannot exceed 40.
You must wait for shares to cool off, Cramer concluded.
Executive Decision: Splunk
In his first "Executive Decision" segment, Cramer spoke with Doug Merritt, president and CEO of Splunk (SPLK) - Get Report, the big data company with shares down 11.5% over the past month as money managers make room for new offerings like Snowflake (SNOW) - Get Report.
Merritt explained that with more and more devices connecting to the Internet, companies need people like Splunk to help them capture all of this new data and make sense of it all. Soon, he said, every company will become a data company as they digitize their operations.
Having access to all your data allows you to optimize your entire operation and reduce costs, Merritt added. Every department within an organization can benefit from the new opportunities data provides.
When asked about the flood of new companies in the big data space, like Snowflake, Merritt explains that while there are a lot of players, Splunk has been around for 15 years and is still among the fastest growing companies at its size. He said they have the expertise and services that their customers need.
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Off the Tape: Slice
In his "Off The Tape" segment, Cramer sat down with Ilir Sela, founder and CEO of the privately-held Slice, the technology platform for local pizza operators that features delivery for just $1.95 per order.
Sela said Slice takes a digital-first and merchant-friendly approach to helping local pizza vendors excel in our new, digital world. He said by providing an all-in-one service, Slice can make local restaurants more efficient and put them in a position of strength.
Cramer said Slice is helping small businesses survive in a world that's increasingly stacked against them.
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From Techs to Cyclicals
In his No-Huddle Offense segment, Cramer welcomed viewers to the rotation, where investors are dumping the high-flying tech stocks in favor of the safety of the slow-and-steady cyclicals.
Just look at the chart of any of the cloud stocks, like Workday (WDAY) - Get Report, Service Now (NOW) - Get Report or Adobe Systems (ADBE) - Get Report and you'll see the recent declines as investors grew weary of the volatility. But compare those charts to a chart like FreeportMcMoran (FCX) - Get Report, and you'll see a completely different story. Shares of the gold and copper mining giant are up 29% for the year, in a straight line form their March lows. Cramer said Freeport might not get any attention, but it's steadily rising and is exactly the type of safety stock investors are craving.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Friday evening:
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At the time of publication, Cramer's Action Alerts PLUS had a position in COST, NKE, AAPL.