If there's one thing that can slaughter the bull, it's supply, Jim Cramer warned his Mad Money viewers Tuesday. The stock market operates on simple supply and demand, Cramer explained, and while it's sometimes hard to see, a wave of new shares is upon us.
Cramer's prediction about Beyond Meat (BYND) came true today, as the company reported strong earnings, but still saw shares plunge 22% as the lockup on insider selling expired. Cramer said he remains a fan of Beyond Meat, the company, but its shares simply aren't worth $5 billion, even after today's plunge, especially given the coming competition.
Beyond Meat is only just the beginning, Cramer said. Uber's (UBER) lockup expires on Nov. 6. There are only 200 million shares currently trading. Next week, that number will balloon to 763 million shares. All of the other spring IPOs will be following Uber's lead later in November.
New shares are just coming from lockup expirations, however. The Saudi Aramco IPO still weighs heavy on the market. We still don't know if, when or how big this deal may be, but no one is clamoring for another fossil fuel company. New supply is also pouring out of China. Cramer called the flood of substandard Chinese IPOs a disgrace and pleaded for regulators to simply put a stop to them.
This flood of new shares will take their toll, Cramer concluded, which is why investors need to be ready and proceed with caution.
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Don't Follow the Billionaires Blindly
Stop blindly following billionaire investors, Cramer pleaded with viewers. Billionaires make mistakes just like the rest of us, he said, and they have completely different priorities from you.
Cramer said he listened intently to Bridgewater Investment's Ray Dalio's comments earlier Tuesday. In them, Dalio painted a cautious picture that to Cramer screamed "sell everything." But Cramer said while billionaires can afford to take a pause in their investments, your retirement savings can't. That's why Cramer's entire career has been focused on finding winning stocks no matter what the macro environment at the time.
There is always a bull market somewhere, Cramer says at the open of every show, and that applies to today as well, no matter what the billionaires are worried about.
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Is Twitter Broken?
Is Twitter (TWTR) a broken stock or a broken company? Cramer dove into the company's latest earnings report to find out.
When Twitter missed earnings estimates back in July, no one seemed to care, Cramer recalled, as the company was showing both user growth and monetization. In retrospect, that shortfall should have been a red flag that there was more pain ahead. When the company reported last week, it once again missed the mark, posting a three-cents-a-share earnings miss that led to multiple analysts cutting estimates and downgrading the stock.
Cramer admitted that Twitter's recent tweaks to its advertising platform have proven to be a misguided, but is that mistake worth 20% of the company's market cap? He said it's time to rethink the negativity. The stock deserved to get hit, but not this bad.
It's too late to sell Twitter, Cramer concluded. He instead advocated building a position on any further weakness.
Executive Decision: Zebra Technologies
For his "Executive Decision" segment, Cramer sat down with Anders Gustafsson, CEO of Zebra Technologies (ZBRA) , the asset tracking company which just posted 15-cents-a-share earnings beat that the stock soaring 6.6%.
Gustafsson said business is the most complex team sport there is and Zebra's performance stems from great execution by the entire team. That includes a new multi-year agreement with the U.S. Postal Service, the largest contract in the company's history.
When asked about China, Gustafsson explained that Zebra is working with their partners to set up redundant assembly facilities for all of their products. These lines will be operated by many of the same partners, so the quality and expertise will remain for all of Zebra's customers.
Turning to industry trends, Gustafsson said that healthcare remains the fastest-growing segment, driven largely by regulations for more accurate procedures and better outcomes. He said markets in Latin America and Europe continue to expand. Meanwhile, retail is also strong, as more companies move to an omnichannel strategy that requires better tracking of assets.
Accounting Issues Signal Sell
Shares of Baxter International (BAX) plunged 10% last week after the company announced it is opening an investigation into some accounting irregularities. Are shares are buy, or should investors jump ship?
Cramer said his hard-and-fast rule is that accounting issues always mean sell, but if anyone deserves the benefit of the doubt, it's the tried-and-true folks at Baxter. According to the announcement, the issue stems from how the company accounted for foreign exchange rates internally. The discrepancy, if true, could be worth seven cents a share to the Baxter's earnings. With shares already off 10%, Cramer said the worst case is already baked into the share price.
But even with Baxter's earnings momentum, Cramer said he has to stick with his rule and sell. No amount of good news can offset the fear that accounting issues can cause, he said, so until Baxter sounds the all-clear, investors need to stay away.
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