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tv   Mad Money  CNBC  December 12, 2019 6:00pm-7:00pm EST

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myself caught it well done. >> smdh. >> i will tell you eli lilly trading well brayen. back to you. >> got a little time to work with. >> guy adami. >> last night i jammed you up. tount look at me. >> guy adami thank you for watching "fast money. "mad" starts now my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to make you some money. to put it in context, my job here, entertain, edge, teach, call me at 1-800-743-cnbc or tweet me we hear they chinese government reaches a potential phase 1
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trade deal and the market soars the dow gaining 221 points s&p climbing .86% and the nasdaq .73%. what do we say hello? ♪ hallelujah i don't mean to trivialize the importance of this news. it matters it does matter >> president trump -- >> trump stock, trump stock. >> might be able to reduce the tariffs with the chinese by 50%, or cancelling or forestalling the tariff hikes that were supposed to go into effect this week that would have affected a lot of consumers china is willing to make some major agricultural purchases while doing a better job of enforcing u.s. intellectual property rights and maybe opening up their market, specifically to the services and especially the financial services industry. and that's a big deal. but, and this is the world's biggest but, the days when a china deal could control the fate of the whole stock market are long gone, even as we act as
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if it's all that matters initially the market reacted to the tariffs as they were going to cause a worldwide recession this whole deal or no deal game seemed a lot more significant. now, though, the trade war has only escalated, yet our economy is in fabulous shape our stock market keeps charging to new records and job growth is extraordinary. at this point, this phase one deal with china, let's call it the icing on the cake. even if it falls through, the cake is still pretty darned good and if we get something signed, it could be even better. but as i'm about to go through it, it's a small part of the s&p 500. that's why i want to explain what's at stake with this phase 1 trade deal and how we could potentially profit it from, because it's not mad politics. it's not mad china it's "mad money. first, let's be clear. what do we get in exchange for trump agreeing to roll back some of the tariffs and hold back on others what's at play here? what can go right? it's an agreement that very specifically benefits some major
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institutions, at least that's what it sounds like to me, and you're looking at them jp morgan, citigroup, goldman sachs, american express, mastercard and visa. if everything goes right for the u.s., this tentative deal would let them establish a strong presence in china, and they'll finally be able to maybe compete directly against chinese operators rather than being forced into partnerships with them where they would steal all the intellectual property and perhaps even my bank account okay the financials have roared here. but i think they're still worth buying even jp morgan, the most extended, that stock has had a big move i like american express the most on this, because a china deal would give it enormous cache in the people's republic. i'm looking at the pastiche and deciding that this is one they'll like the best. my second favorite would be goldman sachs, which needs to get some growth here china can provide it visa and mastercard could easily have more upside and the ceos, time and again in the old days told me if only china would
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really let us in well, if they do, look out above. again, all these stocks are excellent. and even if the deal somehow falls through, the valuations are not that bad so other than for this one, and i happen to like them, my charitable trust owns it, you can handle any deal that breaks down and still do okay i have to say that because think about what's been going on the second echelon is tech this morning we got a very discouraging note from credit suisse about a possible 35% drop in chinese iphone sales. plus they point out that the tariffs could raise the cost of anni phone here by 67 smackers apple was down more than two bucks when the president first did that tweet that made people feel better about stocks by the end of the day, you know what the stock closed in the black. and you know what that says to me it says so much for trading, not owning apple. own apple. even today, this deal will keep
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status quo for apple here and maybe give a sales boost over there, hence the rally into the close. i've been adamant 245 you should have some 5g internet superb with the deal looking very likely you know what you want to own? yeah, my dog, who's got some kind of kennel cough it's kind of annoying. i hope he does okay, because the chinese regulators will finally perhaps let them acquire melldla melanox. everyone is going to get so excited. i also think the more traditional fiveg oriented chip makers will work, even though they're up a lot skyworks, qualcomm i'm a big fan of amd, but it ran too much today in anticipation so one more manufacturing problem at intel and also some very high speed new products you know what? i've got to tell you, in anticipation of the delays of intel, i'm going to say don't own intel. after the bell, broadcom reported i thought it was a good quarter.
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more importantly gave a big dividend boost, and that works too. go by fractional shares. it's 300 bucks what else? i think people are wagering too much on some of the traditional cycles here, and that mean you've got to by thinking about caterpillar, honeywell or commons. their numbers might go up, but i don't go crazy with them i would love to recommend boeing if they can just fix the 737 max. unfortunately, it doesn't seem that they can. charitable trust owns this these we have to be careful, because the numbers can still come down. you know what should catch fire, maybe though it shouldn't, energy i think the machines that control so much of the day to day action are set to buy on news i discover these things. schlumberger, probably best in show chevron did well today exxon down and out bp. those are trades like caterpillar, cummings, don't overstay your welcome with any of these now, let's reel down let's get excited. let's go to hasbro mattel.
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they've been trying to shift their sourcing away from china it tells me a lot more progress than hasbro. both stocks surge on the news today. i think they've got more room to run. when we talk to the ceos of hasbro and mattel, we're very conscious this weekend's tariffs were going to hurt them inordinately they're really in the crossfire. guess what if we do delay or scrap december, these are going to be two stocks you can still own and buy. i like mattel here i think you can go much higher, otherwise the prices for the toys would be prohibitive. it's not just toys the whole toy retail has been hurt dollar tree has been hobbled upside, home depot has been trashed. some self-inflicted. upside walmart and target, they spend a lot of money in china. the best thing about these retail stocks, there is not a loft upside built into them already. they seem attractive andy, let's talk trades. macy's and kohl's. with macy's i think the estimates are probably too high,
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even if tariffs get rolled back. kohl's sees more momentum from the amazon partnership you can return your amazon purchases in person at their stores these work only so far as you can throw them best buy and footlocker have the most exposures to this weekend's computer and footwear tariff hikes that are now being put on hold perhaps best buy had a terrific quarter. footlocker did not best buy investment, footlocker, trade. nike, never in trouble still some short sellers betting it because of the china exposure they would miss. sneaker kingpin reports next week investment just like nike, starbucks, never really in trouble with china i have liked this story ever since kevin johnson came to the u.s. air force academy and told us he wanted to back up the truck at $81. investment, not a trade. trade las vegas sands, the casino company with a huge presence in macau. winner winner, casino dinner how about transports fed ex, trade. word today hurt by china numbers are probably too high.
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it can get a bounce. investment, union pacific, the most china exposure and diagnose a lot to buy back stock and clean up their operations. finally, some odd balls. waste mfgt used to sell a lot to china. the stock did nothing today. like that. stanley black & decker sources a lot of stuff from china. that's why it was today. the president with the ceo of stanley, cummings and union pacific. all that said, i still think the best way the bet on trade deal is by presuming something is going to go wrong, even after today's encouraging developments why? because despite this tentative agreement from china, i expect them to renege talk is cheap and reforming your legal system is expensive. next week i'm going to go back to our regularly scheduled program and start talking again about stocks that have nothing 20 do with the trade war i know people have been demanding this list. i read my twitter feed other than a couple of knuckleheads that really despise
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me, that's what you want and the guys who really despise me, you know what? you can't stay away from me. now you know what works. now you know what's going to happen i just remember, please, these are mostly short-term trades -- >> buy, buy, buy >> sell, sell, sell! >> not investments and then we're going to go back next week to the hundreds of stocks that have little or no relationship with the trade war or the trade truths. hey, by the way, once again, how stupid was the guy with the trading apple? if you want to sell down, fine but trading apple -- it's supposed to make a noise okay anyway, let's go to mike in florida. mike, mike, mike >> caller: hey, jim. how are you doing, buddy >> i am doing well i'm blasting the people who say trade apple. do you mind? >> caller: not at all. >> how about those people? how much do they cost you? >> caller: i have a question >> go ahead. >> caller: i'm actually calling about delta. >> delta >> caller: with delta, i've been holding it for a while i have a large position in there. >> okay.
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>> caller: and i've had a good run, but they're kind of stuck in a range. >> yeah. >> caller: now with the 737 coming back into service some time in the near future some time, i don't know if the influx of all those planes coming back to service with the other carriers is going to put pressure on delta. >> let's talk -- the airlines are an okay group. they're very inexpensive the stock of delta is very inexpensive. the stock of apple is very inexpensive. i would rather own apple than delta, just top of mind because i still can't believe that someone took out the stock just today right on the eve of the agreement. all right. the tentative deal, let's talk about it for a second while i do this one trade deal with china can give a lift to a lot of stocks, even some surprising names. i'm giving you my lessons, kind of subliminal, like let's go out to the lobby and buy some 7-up remember, a lot of these are trades, not investments. i'm talking to the ceo of adobe.
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what is the market rotation out of the cloud for the company mean going forward and then news that a trade deal may have been reached. i'm going tell you why there is no time like the present for china and the job explorers to pay the piper. and last week i asked the ceoss of robin if they planned to add to the platform. they demurred. they're not demurring today. you can go buy a dollar's worth of apple or even 50 cents or a penny or have the credit suisse guy whamma jama you out of your own money. so stay with cramer. >> don't miss a second of "mad money. follow @jimcramer on twitter have a question? tweet cramer, #madtweets send jim an email to or give us a call at ss800-743-cnbc mi something head to donald trump failed as a businessman.
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this holiday season adobe has a design for giving investors holiday cheer. can they create enough christmas spirit to make your portfolio a
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winter bond land >> oh, boy some companies just don't know when to quit look at adobe, the long-time cramer fav digital and marketing king ping with software that is essential, if you're trying to sell on the internet, create new designs, do anything ecom. adobe got hit over the summer, but last month the darn thing came roaring back, and now we're witnessing the next leg of this rally. after the close today adobe reported a terrific quarter. all i can say it's almost impossible to get this kind of growth from a company this size, and that's why the stock is roaring in after-hours trading i think it has more upside, maybe a lot more upside as it is trading at an all-time high this very evening let's dig deep were the bankable chairman and ceo of adobe to learn more about the quarter welcome back to "mad money." >> thank you so much, jim. >> look at these numbers surpassing $11 billion
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you've got growth. a lot of people were worried you could stay above 20% you far exceeded that. which are the big drivers that make it so that you have 24% year-over-year annual growth >> well, jim, i think most companies would be thrilled to have one growth initiative that's actually paying off, and we have three, whether it's unleashing create activity, whether it's accelerating document productivity or whether it's powering digital businesses content is fueling digital economy with the core of what's happening across all digital and it's really great to be able to post the kind of numbers that we did >> when you first started talking to me, you talked about how everyone has a story to tell how far along are we now that people are discovering that they do have a story to tell, and they can use you to tell it? >> well, digital media arr grew 539 million in terms of the net new arr, jim, and that's a record this is years into the
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transition from the desktop to the cloud, and max was the most successful max ever. everyone has a story to tell, whether you're a k through 12 student, whether you're the largest enterprise in the world. new devices are emerging systems are emerging and so i think we're just enabling anybody to take the creative ideas that they have inside and express it across any medium >> at the same time, i am astonished that a business like the document cloud is still growing like a weed. deutsche bank, saudi aramco, saudi aramco came to you for help with paper to digital >> when everybody is trying to figure out how they can move to a paperless society, how they can expedite automating and efficient paper-based processes. there are trillions of pdfs that are being created every year there are billions of people who are viewing pdfs and the way we have extended the
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format, the way we've innovate aid ross the desktop and mobile, the way we're making all of this available as embedded services in the api economy so that people can embed media within their business processes, that's fueling the growth i think to your point, q 4 document cloud group grew 31% for the year we continue to see acceleration in that business how pdf can help with moving inesch processes to automated and digital. >> most companies, they want to go giant enterprise. some want to do small/medium-sized business. i am impressed once again. you use a term that i'm going to incorporate, steam, not stem and you have ambassadors at a young age who even in a time we've been talking are now ruling the world talk to me about steam >> well, i think the world without us, jim, would be a very boring place and if you're talking about people who are changing the
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world, through corporate social initials, everybody has to really make sure that when they're trying through social media to get a following, to be able to tell their story, to be connect emotionally with their customers, that's the kind of next generation creatives that we are attracting to the adobe creative cloud platform. and it doesn't matter whether that is mobile applications, whether that platform is youtube, whether that platform is a social media platform, whether it's instagram we just want female be able to use adobe products across ever one of those different media types. with new emerging things that are appearing, whether it's augmented reality or virtual reality in which you can actually enter their environment, we're at the forefront of that technology as well so we're not going to rest until every single individual has access to adobe technology we are going to say that
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approximately 23 million people now have access to adobe spark, which is a very, very simple and intuitive way for people to be able to express themselves >> you have also become the gold standard on ecommerce. some brilliant acquisitions. i always get -- you give them your name, they correctly follow up but give us a gauge. because you're realtime. how is holiday season going? there are six fewer days >> well, you know, what was really interesting last week, jim, was whether you were watching watching cnbc in the morning, whether you were listening to the radio, whether you were reading the news, it was so gratifying to see the adobe holiday reports, the digital index reports powered by what we are seeing in terms of the transacts that are happening across adobe analytics, the commerce ground, and what stood out for me is every day has been a record in terms of digital spend. people are not just accessing
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websites now on mobile they're actually transacting on mobile devices there is billions of dollars being spent every day. we think the entire shopping season is going to be over $140 billion. so it's nice to be at the center of not just content but also data and providing insights to our customers so they can engage digitally with consumers >> are you able to -- how much are you able to keep tracksome of some of the great chinese company given some of the trade wars >> for the most part we are a global economy we do have our products available in china as well, jim, whether it's a multinational u.s. company that wants to have a consumer presence in china so the trade wars, i mean, we're all for making sure that economic boundaries don't exist and that people can conduct trade fairly, but we have so much country we are not overly concerned with what's happening in china and the trade war specifically right now. >> all right i want to give you a chance,
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because every time you come on, you've got something new and different, exciting. fresco >> well, you know, i've always said, jim, that i think it's crazy that in this day and age people think that drawing with a mouse makes intuitive sense. so fresco is one of these new applications just like what we did for imaging with photo shop, where we made photoshop accessible in the digital era for billions of people and democratized imaging. we think the same thing should happen for artbook and illustration when you look at fresco and the attention to detail that our incredible engineers have done, whether it's with oil paints or water colors, fresco is just a new breed of application that's appropriate for a tablet device. it takes into account what you can do with stylus, and it's again our way of making sure we can leverage the incredible work that companies like nvidia and others are doing with respect to hardware improvements, what's
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going to happen with 5 g so this can all become accessible. >> right. >> and how do we think about that with adobe sensei which is magic and make it access to believe a new generation of secretives >> i want to congratulate you. i know there are people who felt you were going to go to 19 or 18%. i knew you were going to go the other way because you such fabulous products and leadership thank you so much. i've got to tell you, this was a huge quarter for you and i hope everybody realizes that it's just getting faster and accelerating, not throw slowing. thank you so much for coming on "mad money." >> always a pleasure, jim. thanks for having me >> all right guys, go and check one of their products you will just love it. and that's why the numbers are so great "mad money" is back after the break.
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as we learned that president trump is willing to roll back some of the tariffs on china in exchange for some major concessions, let me tell you why i've become such a hard-liner. it's not a new position. most people on wall street are big believers in free trade. there are a million economists who can tell you why tariffs are the worst thing in the world call me skeptical. it all goes back to my father, who used to sell gift wrap this was always his best time of the year he had all these christmas wrap rolls and american made paper in his workshop which he called the place. gorgeous loose leaf sample books, kitcheny, throwback, commercial, color santa. he repped so many mills that it was hard to find gift wrap that he didn't carry. then china decided to target the gift wrap society. they maybe paper so much more cheaply, it didn't matter if it was lower quality. these giant golden rubber bands replaced 3m's beautiful ribbons.
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it used to be one of my dad's best sellers i was so proud i learned tomak bowes myself these days, if you google sashin, it's a girls name. china went in all gift wrap and then bag we welcomed it at the time and i should add that my dad only loved doing business with the chinese. this is the last bag that he made for me. you can see it made in china. okay it's beautiful no plastic pop was an environmentalist from way back they were great. but there is a real cost here. the people who manufactured the stuff in america before, they lost their jobs. their towns died fentanyl, opiate, you get it now this goes well beyond gift wrap we're talking all sorts of electronics, turkey, high cheer, ceiling fans, the list goes on and on with each of these items i see towns sla that have been decimated just like the towns that made gift wrap for my dad's
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jobbing business, just like the towns that would have made this bag. the economist will tell you the tariffs raise the cost of living but they're wrong. a tariff is a sales tax. constantly hear terrifying numbers bandied about. a thousand dollars per household hold the most cottage generalsy. that's a total crock they can always reshore these businesses even if labor costs in the u.s. are too high, it's cheaper to move to another country, a country that doesn't have such unfair trade practice, to keep the factories in china mexico is a better place threatening to take the business elsewhere if they don't get better prices. why not? most of these jobs are make work anyway, people the communist party subsidizes all parts of industry as kind of a gigantic jobs program. if they don't want the cover the cost of the tariffs, it's easy enough to move the production to kei thailand that's why we're not paying the full cost of the tariffs, even though the media says you are. even if the trade war costs a
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thousand dollars a household, which it doesn't, is that really such a bad deal if it prevents people from losing their jobs and towns going under? i think it depends on how many jobs we're protecting. the free traders will tell you it's always worth the trade-off. to me that's insane and the chinese government has been taking advantage of us for decades. if we're going trade jobs for cheap stuff, at the very least we should get a cheap exchange rate this is the perfect moment to crack down on them because our economy is so strong their economy isn't. i almost hope china reneges so the president can ramp tariffs back up and get a better deal later on i said almost. so stick with cramer do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere.
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♪ last week we checked in with robin hood, the privately held company that's disrupting the online held brokerage space. there was one fly in the ointment robin hood didn't offer fractional trading which makes it harder for traditional to participate in high dollar stocks like alphabet or amazon earlier today they allowed you to buy pieces of stocks in minuscule instruments. let's take a look at valentine's day tenet, the co-founder of
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robinhood. welcome back to "mad money." >> a pleasure to be back >> three great american companies reported, costco, $300 stock, adobe, $300 stock, broadcom, a $300 stock up until now, how would i have bought those at robinhood if i didn't have all that much money on one of your 10 million, and what can i do today so i can make it to own one of these companies? >> that's a great question up until now you would have had to wait if you dpods a smaller amount, you would have had to wait to have enough to buy one share. today we're happy to announce that we are launching fractional shares on robinhood along with drip or dividend reinvestment and reoccurring investments. fractional shares will be rolling out next week with drip and reoccurring investing following up early in the new year we know that you've been very excited about it in particular you asked us about it when we
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came on your show last, and we've heard from lots of other customers as well. so we're really happy to be able to bring this awesome feature that really democratizes investing even further to our over 10 million customers. >> you know something fun? i have to tell you when i look at the most widely held for you. look, there is no shame in owning a fitbit or a gopro or crone news ive would rather see more people own microsoft, disney. they own some of those do you think with this new strategy, maybe we see amazon in there? maybe we see alphabet. maybe berkshire hathaway people are going to start diversifying to other larger company, correct >> i think we should expect to see that and research especially when we talk to customers and we do a lot of talking to customers, in particular with this feature, we see customers' eyes lights up
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when they deposit $10 or $100, and the entire universe of stocks that they would like to invest in or stocks that represent companies that make products they love is available to them. so like you mentioned with as little as $1, you can buy shares in all of these companies that are worth hundreds of dollars per share, thousands of dollars or in the case of berka, hundreds of thousands of dollars a share. i think that really is amazing for customer, having the entire universe of stocks to be able for them to invest in. >> valentine's dlad, do these l companies realize they have shut out by having these big institutions and without robinhood and others like you, people can't own a piece of america, because they look at the dollar amount and they say i'm never going to be able to buy a share of amazon. >> i think there is obviously
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reasonable explanations for companies having share prices the way they are and not engaging in stock splits and what i'm excited about is with technology and specifically our in-house clearing platform, which we've built and rolled out over the past year, we can now use technology to solve some of these problems completely in-house so i think what i see the role of robinhood as really helping make the markets accessible, make the financial system accessible with fractional shares and with our other products in particular cash management, which we started rolling out to our customers on the wait list just yesterday and you know, we know there is a ton of demand, and we're trying to service that demand as quickly as possible to get it out to our customers >> so with the new cash management program, the dividend reinvestment program, with the idea of a millionth of a share,
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because that's going attract a lot of people, do you foresee your account sizes in those $10 million growing just because people keep the money in and it will compound? >> i think that any time we've been able to remove a critical friction or a barrier from the investing process, that's translated into customers being happier, more satisfied with the product than ultimately translated to business success so we definitely expect to see that here. as a matter of fact, in few short hours since we made the announcement, over 200,000 people are already in line for our fractional share product so i think the early signs are really promising, and we just have to keep focused on what we've always been focused on, which is keep reducing friction and be the best place possible for new investors to start investing. and as you know, 50% -- over 50%
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of our customers are first-time investors that are experiencing investing threw robin hood but also, we're focused on improving our products for experienced investors and existing customers ranging from active to more passive investors. >> one last question, vlad >> sure. >> i know you watch the show you know i've been saying from looking at your numbers that millennials actually do like stocks, that there is something going on deeper in this country. a reversion to owning a share of a great american or worldwide company. am i too pie-in-the-sky or are you seeing it too? >> we're seeing it as well i think that i've watched your show since i was a kid, and i first got into investing through individual ownership in companies that made products that i loved and that began sort of a life-long passion and excitement for investing for me so i think if we can help other
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young people especially capture some of the magic of being an investor in the company and actually feeling like you're part of that company and the products i think will lead to an overall healthier economy and a much better informed investing public >> bingo exactly. you're dead right. vlad tenev, the co-founder and co-ceo of robinhood bringing out the fractional shares that we all want thank you so much, sir, for coming on "mad money." >> thanks for having me again. >> it's real go buy some stock. you don't even have to do it with a dollar. start now. and then you'll get wealthy if you keep compounding and compounding. if you take some risk if you're younger. but i want you in stocks stay with cramer "mad money" is not a show
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about picking stocks for you it's a show about empowering you to pick stocks for yourself. >> i want to say thanks to you for creating "mad money." >> ba-ba-boo-yah. >> the man, the myth the legend. >> the wizard of wall street >> i want to give a good boo-yah. >> you are the reason why we do this apps are used everywhere...
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"lightning round" is sponsored by td ameritrade it is time it's time for the "lightning round. >> buy, buy, buy >> sell, sell, sell! >> and then the "lightning round" is over are you ready, skee-daddy? let's start with mike until new york, michael? >> caller: hello, jim cramer a big buffalo bilbaoias to you. >> hey, buffalo bilbaoia what's up? >> caller: i'm investing in current 8% dividend, in your opinion, is this sustainable >> i think it may not be sustainable. if it all goes where the five-year curve, you're going end up feeling why did i do that i'm not going to bless that idea
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although i will bless the bills. jeff in california >> caller: hi. we love you here in downtown l.a. where it's about 73 degrees. i have a two-part question the stock that i'm looking at has very weird movement. it's completely flat-lined for five months. then it pops up two inches then it flat lined for two months again why does this happen, jim? is this good or bad for a stock? the stock is ring central. buy, sell or hold? >> ring central? how can i help you that's flat. we think it's the gold standard in that business, but it's so highly valid, you buy that one only on the dipsteroonies. >> caller: boo-yah, thanks for having my back. >> my pleasure. >> caller: alterix, is it a good time to buy? >> i don't know. i think we have to wait for it to come down further not only that, but the charters have decided to --
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>> sell, sell, sell, sell, sell, sell, sell, sell, sell >> there was a raid on the stock. a lot of things say negative things steve sticker, please come on the show and straighten these guys out we think you're displacing a lot of the classic spread shields. let's go to joe in nfc joe? >> hello jim cramer. i always look forward to what you have to say. thank you so much. >> my pleasure >> last week i was in new york city they're all buying canada goose coats. >> no. november was warmer. if you don't want to buy the warm coats when it is too warm, and that, ladies and gentlemen is the conclusion of the "lightning round"! [ buzzer ] >> the "lightning round" is sponsored by td ameritrade i seen unbelievable opportunity. i see best-in-class platforms and education. i see award-winning service, and a trade desk full of experts, available to answer your toughest questions. and i see it
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♪ what's it going to take for down and out software as a service stock to get their mojo back we've seen it happen to a bunch of them. the cloud-based application monitoring play, meaning their platform helps clienting keep track of what their business software is doing. and now customers are interacting with it in realtime. it's been one of the hottest and most reliable stocks around. but the stock got pulverized falling from mid 90s to the mid-50s. now last month, the company delivered a pretty solid quarter and the stock rebounded.
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but it's still down dramatically from the highs could this be the beginning of a larger comeback? let's take a look at the founder and ceo of new relic who helped investors to make the case pour the stock. welcome back to "mad money." good to see you, lou >> happy holidays to you i know this must be a busy time. >> it is there are a bunch of websites that could cost their companies millions if they go down during holidays. >> it is crunch time for our customers, jim for so many of them, obviously ecommerce companies, but also open enrollment. we've got a lot of companies in the health care space. we have compaustomers flooding online to make sure they have plans. we do that with the new relic one platform >> what was your message today because i know that there are a lot of analysts saying green chutes, green chutes, don't give up and i thought my favorite slide, our priority is growth. >> that's correct. our priority is growth we've always had the long-term
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in mind when we've done it on the screen you see the digital dashboard. scratch that out it's the digital platform. so digital needs a platform, not a dashboard. we spent two years building the new relic one platform in anticipation of where the market is going our customers want one platform on which to see everything going on in their digital business, application performance, infrastructure, and most recently log machine data, all in one place that place is new relic one, which is the platform on which the future companies are going to make their digital businesses successful >> okay. if that's the case, november 5th, an analyst who likes your stock, says this is for longer and thus disappointing first reported billions growth in guidance very weak. billings growth was 1% year-over-year that does not sound like growth, lou. >> well, we've been investing for the long-term in building that platform, jim we anticipated where the market was going, and we did that while we were investing in that, we did that at the cost -- >> excuse me >> no worry, no worries. there were some short-term things we might have done where
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we were not investing for the future but we think when this all plays out, our platform is going to pay the dividends. >> so now we go to your cfo and corporate secretary who says in the november conference call turning to cash flow from operations, free cash flow from cash minus capital software costs, negative $8 million we can't have that, lou. >> we're a growth company. we're investing for growth so as we built out the platform capabilities, we feel like what the market needs, and our customers are telling us great things we think as we look out, the unit economics are great we've got among the very highest gross margins of any sas companies. as our customers adopt the platform, it will show up in cash flow and ultimately profitability. >> so can we say as some of the analysts like jp morgan wants to say very much in a -- in a note from november, second quarter signs of stabilization encouraged by some of the early commentary and maybe the cash
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flow guidance is going get better from here >> well, i don't want the talk about anything different from what we have said already. >> fair enough. >> on our guidance so we feel good about our guidance but what we do believe is we have now delivered the platform. we have everything we need in place, the products, the platform, and the field to be a billion dollar business, and now it's time to focus on the performance culture. >> but you did push back your timetable to be a billion dollar business. >> we still feel comfortable being a billion in the time frame we have put out. >> 2023. >> that's right. and that's still a healthy growing business that will have nice margins and there is plenty of upside from there we're not looking to stop at a billion. we worked on this platform we started the platform thinking to ourselves what does new relic need to be a $4 billion business and so the platform is the underpinnings that will support the growth beyond the billion dollar >> so how is the churn and how is the upsell for those huge number, $100,000 customers >> one of the things we're really focusing on we talked in
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our investor day is we have 900 customers today that pay $100,000 or more >> right. >> and when you look at this segment, they retain very well well north of 90%. and they grow their span better with us. our strategic goal as we think of growing the business is to add that number of customers we want the add a thousand of those customers over the course of our journey to a billion dollars. >> i'm trying to understand your pricing. if my retailer, my business, my website goes down for 16 hours, it could cost me $10 million why am i paying new relic more why can't i get new relic to make me pay more >> we have many, many customers spending far more than a million dollars with us. i think the last number we quoted was 880 customers plus spending a million dollars or more on new relic and our largest customer is around $10 million a year spend rate. we have strategic value. now with our platform we're
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making it the natural thing to bet larger investments on. we just want to put that base of $100,000 customers in place so that will sustain growth far beyond the billion dollar. >> you havesaid in your conference callings in the analyst meetings there is no demand issue that isn't what drove the stock down you had this transition. >> that's correct. >> there is not less demand from new relic's product. i'm grilling you on this because the stock got hurt, and i've been recommending it for a long time so you know that. >> here is where we are. we're in the age of software so we're in a software economy international there is going to be more software written in the next ten years than written in the last 50. in all my life there has been less software written than there will be in the next decade we are well-positioned to be the platform on which people deliver more perfect software. if you look at the right time frame, we believe we're well positioned to sustain great growth >> so what can we say about the new platform versus the old digital dashboard? did the salespeople understand it there were questions about
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european salespeople there were questions about nitty-gritty about who is selling what >> with is retransitioned from being -- we started off as an applications performance management company and then added these other products and what we decided to do which is we believe visionary and ahead of the market was put it all into a single platform that integrates those products well together and as we are doing that, that has required our team to understand and evolve how they sell we've gone through the training to help enable them to sell the platform, and that's what we're focused on going into the next -- the back half of this fiscal and into the next fiscal. >> i should emphasize this is your fifth anniversary you had to take the next step to get to the billion. >> absolutely. >> all these transitions are hard. >> yes >> but your timetable, 2023. we're going to hold you to it to a billion. you feel confident >> we do i decided to invest in this platform because we've all heard of or read of the innovators
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dilemma. we need to get out ahead of that before we had no choice in the matter so we invested ahead for that platform that came at some short-term costs. but i've always managed the business for long-term i'm the largest shareholder in the company. so i'm thinking about new relic for five years from now and i'm excited. >> i'm so glad you're mere because i believe in you and believe in your product. to see you in person and have you say that means a lot to us happy anniversary. >> thank you. >> that's lew cirne, the ceo of new relic. "mad money" is back after the break. so it's simple and transparent with a new level of privacy and security. it lives here and here- on your iphone, and it will save you 6% on holiday gifts at apple; like iphone, apple watch, airpods pro and so much more. ♪ apply in as little as a minute,
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a more secure diaper closure. there were babies involved... and they weren't saying much. that's what we do at 3m, we listen to people, even those who don't have a voice. we are people helping people. i reiterate. most of those at the top were trades typically you don't like to do that, but i know that's what you've been requesting so please be very careful with trades i like to say there is always a bull market somewhere. i promise to try to find it for you right here on "mad money." i am jim cramer and i will see you tomorrow
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>> welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." ♪ and i'm beatrice. and our business is called zoom. the three of us met in college, actually, in our first design class, and it was kind of love at first sight, and we've been together ever since. at school, we came up with an awesome business idea based on high style and impeccable design. people think you have to spend a lot of money to get a good design, but that's so not the case. we figured out a new way to bring style to everyone


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