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Transcripts For CNBC Mad Money 20240713

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Merchandise at the market all at once without new money coming in, and we can have a very rude awakening. Its not necessarily easy to see especially on a day like this one. Dow did not keep points,. 08 and nasdaq lost. 95 sometimes the new supply is as invisible. We heard from beyond me, the revolutionary plant based companies that makes faux ha hamburgers, the stock got annihilated, down 22 today. I happen to love beyond meat the company. Ceo ethan browns stands for a clever concept the idea is that cows are a terrible Delivery System for protein, they add fat and cl cholesterol spewing methane all over here right to your plate, not here, the cow and then your plate. Got it beyond meats product is far from perfect but its a legitimate disrupter of the 1. 4 trillion meat industry. Growth is staggering, their sales have more than tripled theyre already turning a profit if beyond meat keeps growing at that pace, you can argue it deserves to be a multibillion Dollar Company and thats the problem because beyond meat is already a multibillion Dollar Company even after its massive decline, its valued at nearly 5 billion. When this thing came public, it did a sliver deal, offering little stock it could immediately trading up to 46, 26 to 46 and surging all the way to up nearly 240 at its highest in july. Some of that strength was because beyond meat has got a brilliant concept and great execution. A lot of it was simply because there werent enough shares to go around. We have the mother of all short squeezes beyond meat got bid up too high, originally at 14 million, which is a ridiculous love, they have a ton of deep pocketers, they have hormel going after them, nestle, tyson is going after them and the impossible burger the stocks start plummeting when beyond meat did a big secondary offering in august suddenly there were enough shares on the market for the short sellers to go to work, and the darn thing tumbled to 105 as of yesterday, which brings us to todays 23 point beat down believe me, this decline would have been worse if beyond meat hadnt reported such a Strong Quarter. At the end of the day, what matters is the lock up on selling just expired the market is flooded with shares of beyond meat and supply is overwhelmed with demand even here it seems overvalued. Beyond metat is a small enough company that the market it digest this slot what happens if we get a larger onslaught of new shares, well you know what, we are about to find out if the nirs full week of novemb first full week of november, all the companies that became public this the spring, their lock ups on Insider Selling are coming to an end it will be beyond meat writ large and you can call me concerned. On november 6th, the great uber lock up expires. Currently uber is roughly 200 shares on the open market and trading badly. Thats more than triple whats currently out there. If uber keeps trading at 32 were talking about 24 billion worth of stock where are we going to put that i suspect many shareholders will want out this unicorn has been a bust and they dont want to lose more than they have lost already or if they have a slight profit they want to, where is the money going to buy from these sellers. Other stocks will have to be sold, right, unlike beyond meat, the expiration is big enough to hobble the entire market i think we actually would be okay if it were only uber. However, we also need to deal with an underwriting that no one i know seems to be excited about, the saudi iran co ipo which could be valued at 2 trillion. We dont know how much stock will be offered. Were not sure of the date its pretty opaque but we know the stock is supposed to have a 5 yield how low could it go. Guess what, i say who cares. Bp 6. 5 yield, and i thought it was done and going down. It just reported fine quarter this morning, and stocks got slammed because the oils are out of style on the wall street fashion show who needs another fossil fuel stock. Another kiss of death to the market they never stop pumping them out, do they china keeps pumping out junk ipos they offered udao, a chinese provider of Online Learning content and applications, sold 5. 6 million shares for 17 apiece 5. 6, 17, the stock opened for trading at 13. 75 down 22 , and closed its first day at 12. 50, what kind of clowns thought it was a good idea to bring this public how about citigroup, credit sweat and morgan stanley, thanks for nothing, and the investment banks arent done. In the next few weeks were going to get more low quality chinese merchandise public, and online and mobile real estate platform theres a longterm apartment rental platform. I bet they perform poorly too. The brokers who offer these are craven the buyers are plain stupid, the exchanges are a disgrace honestly i can barely believe that these chinese ipos keep coming who the heck is buying this garbage . Why does our federal government allow this why does our president allow it . Why does treasury allow it why does the section allow it . Why do the investment banks allow it actually you know what, we know the answer to that money. Why doesnt the president do something here these Chinese Companies dont have to obey u. S. Securities laws when they list here which means we get tons of deals by sketchy financials and they end up in the index and our u. S. Government Pension Plans have to invest in them i think its time we say no to chinese ipos its time we stop funding crummy merchandise on unsuspecting americans brainwashed by the Mainstream Media call me sick of it i wish someone would do something but either way weve got a lot of supply coming and thats not good for the stock market of course its never just supply that overwhelms the bull you typically need son fed statement or a vicious president ial tweet that ratchets up the trade war or a slew of trade reports. I know most people dont take me seriously when i talk about how the stock market is governed by supply or demand any market, they think something bigger, some fed survey, something j pal says blah blah blah, listen to me, the bottom line is when you have billions of dollars of stock entering the market without a natural home, you Better Believe the averages are going to come under pressure be ready, the lock up expirations and ipo are going to take a toll, unless a flood of money comes into the stock market i hope we can absorb them without too much pain. Hope is not part of the equation barry in california. Hey, jim, how are you doing today . Im doing well, but fired up. How about you. Not too bad, i just wanted to thank you for all of the help you provided to the home gamers. Okay. And i have i got a question for you on fitbit i have a cost space of 8. 50, dollars, and you know, google has tendered an offer for them its a 2 part question first part, is there any way to calculate on what that price of the offer would be, and the second part is on the day that the stock price is announced, will it always be a premium to what the stock is trading . We dont really know whats going to happen, and i cant comment on rumors. I know that i think that the company is overvalued. Sell half. Okay, lets go to robert in california, robert hi, jim how are you im well, thanks, calling from sunny Southern California with gm having reported good earnings, what are your thoughts on Goodyear Tire rubber. I think good year tire can bounce, yields 4 . I like growth and that company has had no growth for as long as i can remember so im going to say no to that one nick in virginia, nick. Hey, jim, big fan of the show and your track record, quick question on altria do you think the recent momentum we have seen is strengthening longer term bull chase base o ond base ds on or a shortterm rebound. Im going to reference carl quintanillas, whatever you paid for steak in juul is too much, and the people of juul should watch the documentary. Heres what i have to say about you guys, how can you live with yourself supply can crush the bull, thats why the market sees the impression lets hope we can get through it without too much pain. Ray dahlia, and jeffrey, theyre the smartest people on earth, why they may be wrong and twitters recent earnings, ringing too true im eyeing the company to see what comes next and the u. S. Postal service deals with the realtime demands of ecommerce, can Zebra Technologies help modernize the 244 year institution. Im talking with the ceo, so stay with cramer dont miss a second of mad money follow jimcramer on twitter. Have a question, tweet jim, send an email at madmoney cnbc. Com or give us a call at 1800743cnb 1800743cn 1800743cnbc miss something head to madmoney. Cnbc. Com. Got to stop lending so much credence to billionaire Money Managers theyre only human they make mistake asks their priorities are not your priorities theres a tend to take everything they say, after all, they must be brilliant even legends can give bad advice ray dalio said Central Banks are running out of ammo, and wealth inequality will lead to a scary situation. To me that sounds like sell everything the guy makes it sound like the world is ending. I said to myself hes not telling us to go by merck or costco, or is this the time to buy mcdonalds, hes not trying to steer toward a good mutual fund, he just joins a long list of very smart, very rich people, big picture issues and end up scaring people out of the stock market you could have said the same thing in 1989 and would have missed phenomenal gains. Maybe hes not trying to scare you but thats what hes doing all my life i found people who are smarter than i am. I had the highest grade in my generals at harvard. We had guys like bill gates in my class i knew something important my parents were never going to give me a fortune to start a company in my job, and thank you big tobacco, couldnt have done it without youme ic i was determined to help people earn money, left stock tips on my answer machine. I never worried about big tips, ray dalia is mentioning, i didnt give up, when times got tough i looked for stocks that could work in a tougher environment. During the great recession, i found salesforce. Com, i found faang, the plus. Com club so i can look like an idiot publicly to teach you and learn something. And not recognizing the this all has to end badly this all has to end badly. By the way, have i told you it all ends badly frankly, i dont care, i could come out here every night and say theres a bull market somewhere, why bother trying to find it. In the long run, were all dead. I could tell you the world is ending, hide in a bunker im not a billionaire, yochi do have a billionaires priorities. I want you to make money in the stock market Billionaire Hedge Funds dont need to think about the impact of their words, they thats why i think you should take it with a grain of salt. When im wrong, you Better Believe ill be torn to pieces in social media, and i do take that stuff personally. I still read it. At theenend of the day my hope o help you fight the chains i found myself in law school, and i worked harder than anyone i know, and im trying to duplicate that formula for you believe me when i tell you, fretting about Central Banks and political turmoil is a terrible money to make money in the stock market a Billionaire Hedge Fund managers priorities should not be your priorities guys like dalia are absurdly rich they dont need to search for opportunities, but guys like you and i, we do tomorrow, kick off the trading day with squawk on the street, live from post 9 at the nyc. Use a tshirt to preserve the shirt. They taught me this at goldman sachs, one of the few things left over at goldman. It all starts at 9 00 a. M. Eastern. Last week twitter crashed head first into a concrete retaining wall after a year and a half of excellent numbers the product of a brilliantly executed turn around the social media platform reported a seemingly dismal quarter with tempered earns and a muted outlook, in response to nearly every analyst covering twitter cut their sfiestimates a couple downgraded, the stock tumble 28 , from 38 to 30. This is a picture of what i call pure carnage since then we have been fielding a ton of questions about what to do with this thing Everyone Wants to know wither twitter, before i tell you wring its headed you have to understand where its coming from lets rewind to the last time twitter reported back in july. These results were far from perfect but there was enough going right that the market was willing to ignore what went wrong. The negatives, twitter missed wall streets earnings estimates and their guidance for the Third Quarter was pretty tepid maybe that should have been the red flag we needed to be able to spot this ahead of time. However, at the time, nobody cared about the stinking earnings, not when they made, user growth and monetization the monetizable daily active users came in at 139 million up 14 year over year, 4 for previous quarter thats nice. That was the only thing that really mattered to a lot of people because twitter is not really an earnings story, the earnings come later. Right now its a user growth story. Theyre expanding the reach, figuring out how to make money off the user base. That translated into better than expected sales which was more than enough to offset the not so hot earnings number and even the down beat guidance, so twitter stock shot up on the news and continued to rally through Early September. You get the good Growth Numbers, not the earnings, good Growth Numbers and it kind of takes off here it climbed all the way to 45 but then something changed the market turned against high flying Growth Stocks at the time, i thought the stock was only getting hammered because of that rotation although, in retrospect there were warning signs that something was wrong, the weaker guidance in july, it really should have been a big tipoff, mea culpa to me thinking this was just a rotation and not something specific to twitter. The other red flag, in august twitter announced plans to remove outside data sources from its ad buying system in part because they didnt want to be involved in something that some people think would be shady. When you stop using data, your targeted ads become less effect ic ive. You get fewer advertisers, going into the quarter, the stock had sunk from 45 to 38 then twitter reported and the bears just had a field day, reported a 3 earnings miss and revenue came in weaker than expect, up 9 year over year that by the way is the first time they have had a single digit Revenue Growth since 2017. The guidance for next quarter was pretty light making this more complicated twitter gave a fabulous daily active user number, up 17 year over year. We got something to work with here they deliver on the key metric, but the hideous revenue number terrified people the commentary was far from encouraging. The company mentioned head winds and greater than expected advertising seasonality in july and august thats a head scratcher. On the call Ceo Jack Dorsey admitted there were missteps and bugs in their mobile application promotion business where you can advertise mobile apps. However, theyre rebuilding that Technology Behind this business, and dorsey said they are better equipped to fix any bugs than they were a year ago the advertising in july and august seems to have gotten better in september. I biassed toward thinking you know where im coming, a friend of the show slower business over the summer was in part due to a relatively lighter slate of big events and launching in july and august compared to 2018, and here were talking about world cup and soccer however, the analysts werent willing to give twitter any benefit of the doubt here. Most cut numbers and some influential ones like heath terry over goldman sachs, downgraded the stock that was painful, even though he likes how rapidly twitter is growing the user base, he cant get behind the stock when theres so little visibility to the advertising business i get where hes coming from, but man, i mean, didnt twitter just lose 20 of its value in a day . I mean, come on, the stocks down 35 since Early September highs. After such a huge decline, i wonder if the selloff wasnt an overreaction to me, this has come down enough that weve got to rethink the negativity twitter is always tweaking its platform, including how they make and sell ads, it looks like they tweet too much over the summer when they cut out Third Party Data suppliers, making the experience better for users but not so pleasing, i should say, for advertisers. All this happened during a period when there werent a ton of big events to advertise, which is how you got an ugly quarter. And twitter says some of the problems will continue into the current quarter. That was bad okay, all of that said, with the stock down under 30, i think its too late to sell. But just in time to Start Building a position, if you dont already own it i have been noodling this whether i should think about this for, irchtwitter has repord last year and the stock got obliterated pulling back from the mid40s. Investment management figure things out and delivered a string of Strong Quarters taking the stock back up to the mid40s before the company hit another wall i think they can do it again, why, because twitters current problems feel like temporary setbacks to me managers continue to do a great job of growing the user base and at the end of the day, thats what matters, to find out what the president is up to, theyll be able to work out kinks in advertising system sure, twitter screwed up, and the stock deserved to get hit but it didnt deserve to lose a fifth of its value for heavens sake the last time this stock had a major melt down, 27 to 28, which is one more reason to start buying it right here at 29 and change the core thesis, twitter is turning itself into a more enticing place, your screen time remains in tact, if anything, it has gotten better as the user Growth Numbers are accelerating. Managers need to get the advertising system back on track which is something they have done before. Ultimately, i think these prices right here, right now, i think this is going to prove to be a gift if it keeps going down, i just finish reading, as you know, marc benioff, trail blazer, talks about want to go buy twitter. The shareholders didnt want him to, but he talked about how valuable the profit was. If this keeps coming down, i bet someone else will try to acquire it twitter is an incredibly valuable stand alone property, a broken stock but not a broken company. Walter in florida, walter. Hi, jim, thank you so much for taking my call. Youre quite welcome. I appreciate it my question is twofold today, jim. First, is siriusxm a Great Company but a broken stock i ask this because its been range bound in Single Digits seemingly forever. And my second question is do you think this stock will ever break out or is it going to be up 0. 05, down 0. 05 for the future. Auto sales have been bad. As long as auto sales have been bad, and is going to mark time i urge you to stay with it i think when auto sales turn up, the stock can go to ten, its a very good company. Lets go to michael in nevada, michael. Cramer, how are you thank you for taking my call today all good. I have a quick question for you, i purchased entertainment social platform, headquartered in china yeah. About 18 months past, and its taken a pretty good hit for several factors and im looking at about 50 , do i dump the stock, take the tax credit or stay in and use this as a longterm investment i dont believe it is a longterm investment i am heavily antithese chinese stocks i wish that most of them would never have been floated. I think its a shame including wi wi which i dont care for what the heck to do with the stock of twitter, sure it deserved to get hit, no doubt about it not to these levels. On the other hand, you got the opportunity, much more mad money including Zebra Technologies, soaring after earnings could an investment in the company help your portfolio change the stripes, im talking to the ceo and baxter investments, could last weeks drop after earnings be what i consider a red flag . And of course im taking all of your calls, rapid fire, tonights edition of the lightning round, so stay with cramer robinhood believes now is the time to do money. Without the commission fees. So, you can start investing today wherever you are even hanging with your dog. So, what are you waiting for . Download now and get your first stock on us. Robinhood. In the human brain, billions of nefor people with parkinsons, some neurons change their tune, causing uncontrollable tremors. Now, abbott technology can target those exact neurons. Restoring control and harmony, once thought to belost forever. The most personal technology is technology with the power to change your life. Filmgate is growing really staffing a small bquickly and. Is challenging. I needed to fill a production coordinator role. I was looking for someone with specific skills. So i posted a job on linkedin. Maribel had all the skills i was looking for. And looking at her profile. I saw shared connections. That was a plus. But the most important thing. Is the ability to connect to people and she had it. And i knew. She was the one. Post a job today at linkedin. Com grow look at the stock of Zebra Technologies run, this long time cramer fav is a major player in the enterprise Asset Intelligence base, think specialty printers, mobile computing, and realtime locating systems that help other businesses keep track of their inventory. Their vehicles, and their employees. And its use their technology to pinpoint where players are on the field. Zebra has been a fantastic performer and im proud to say as our guest knows that we have been behind it all the way today the stock rallied another nearly 15 or close to 7 after the Company Reported another blow out quarter the company a 328 basis, inline sales, bullish guidance for the next quarter can this stock keep climbing, lets take a closer look with anders gustafsson, and where his company is headed mr. Gustafsson, welcome back to mad money. Thank you, i dont know, it really came together this quarter, whether it be a guy began the health care orders overseas, whether it be a recognition about just in time inventory, and how you can save and not have as many employees it seemed to hit some, its always been good, anders, but what happened, whats the Tipping Point here yeah, i think we just executed it very well. We have been executing very well for some time, and as a friend of mine used to say, business is a complex team sport, and i think the kudos to the zebra team for having been able to execute well for a long time. Now, at the same time, youve had to deal with, i mean, youre smack in the middle of the china trade problem. You are pivoting quickly, and getting your manufacturing out of china how is that working . So far so good. We have already moved all the products that were impacted by one, two and three were now in the middle of moving our list four product out, but as the Technology Company, electronics company, our supply chain has been very focused on china, and were now moving to other Southeast Asian companies with our current partners and replicating our lines. Well have more redugoing forwa. Are they saying youre taking the chinese product moving it somewhere else and youre not doing what President Trump wants. No, we are very careful making sure that we get the proper certification that the country of origin becomes, you know, so resourcing the same components but coming from outside of china, they dont go into china. I was with someone who soused a billion dollars of products and the quality wasnt as good are you able to replicate the great quality that the chinese have. We fully expect so. The partners that have been manufacturing our products today are the ones that are moving the same products to other countries in southeast asia, and they are going into existing facilities so we think that this, you know, the start up issue should be minimal, and we will have a lot of effort, a lot of focus by our team from the u. S. And asia as well as our partners to make sure that we stay on top of that. Now at one point, you do actually call out the weakest area as china. Yeah. Now is that going down the road to hurt your performance or are the others areas doing so well we dont have to worry. China was down double digits. Thats Pretty Amazing you blew the numbers away. And china has been a great performer for a long period of time the weakness in asia was exclusivelyattributable to china. So if you exclude china, we had great growth in the rest of asia lets talk about the biggest contract out there, you won the u. S. Postal Service Contract isnt that gigantic. Thats a large contract were proud of the trust that the u. S. P. S. Has placed on us to supply this this is the biggest contract in the history of the country, they look into now, create great visibility and better execution around their Parcel Delivery network. They do have, i dont know if people realize but all the big retailers use them for ecommerce. Theyre a very large ecommerce Livery Service and they have a huge network of carriers and we will instrument them with new technology that will enable them to have better productivity and a better service. You said to me that health care would be huge it looks like the europeans are starting to adopt it why are they being so Aggressive Health care has been our Fastest Growing vertical for the last several years, our Fastest Growing vertical in q3 we have seen it growing to become much more of a global opportunity, actually, latin america was a Strong Quarter, had a Strong Quarter with health care also. But europe has been strong, and a lot of that is regulation. So in europe, a more centralized health care system, and often come out with regulation to govern a whole country or so lets talk about this grocer, i know you dont name the grocer, but 39,000, is that what is that they can do that also, but its first maybe, in retail, you know, the industry has transform transformed over the last few years trying to invest heavily in technology to enable omni channel capabilities our type of solutions are helping retailers do just that you cant really buy online, pickup in store, without leveraging our type of technology, and this grocer is looking stood the same helping to drive omni capabilities. You cannot do it without zebra. Without competitors. Your competitors frankly are not in your league we have been doing well, but, you know, we have a very solid market share. I think your only competitor is yourself. Thats how i look at it, because i do a lot of work, i was going by the old Simple Technology building, the l. I. E. The other day, and you guys own it, you compete against yourself to up your game constantly. I think thats fair congratulations amazing work guys look at this stock, and were not going away from it at all. Thats anders gustafsson, the ceo of Zebra Technologies. When this stock goes, it really goes mad money is back after the break. Light round is sponsored by Td Ameritrade. It is time for the lightning round. And then the lightning round is over, are you ready, im going to start with joey in arizona. How you doing im calling from phoenix, arizona. I want to know what you think about Grand Canyon University educational stock, globe sto. You know, im not a fan of those, the Business Education stocks, i just havent been. I have been right for a long time not defuativiating my posi. Cvs health, which took a crash from low 80s. Went down to 53, now its back to 66 sells at nine times earnings, thats crazy, i see the stock going to 80 by year end. Dick in new jersey dick hi there, cramer versus cramer, listen should i get a divorce from blackberry, i have had it for six years, came over, supposedly a change guy. Nothing has happened its at an all time low this stock. I did the cramer versus cramer very badly, and i think bb ends badly too. Were going to stay away from that one and remember, nobody ever buys a stock in order to get divorced from it. Jeff in california jeff hey, jim, thank you so much for taking my call. My pleasure. Im sitting on some losses, big losses from 3 d systems, symbol ddd, is it ever going to come back. Youre sitting on the dock of losses jeff in california im sorry. Make it ron in pennsylvania, ron. Hawa hi, jim, how you doing im doing pretty well how about you . Good, im speaking with my stock god in the immortal words of mike myers, im not worthy. Thank you for your many words. I got a hard hitting show, you got to watch it. I really hit it tonight. Lets go in 2017 i started buying cyrus 1 stock, listening to Conference Calls i know they have been growing, buying random buildings and expanding overseas, they pay a 2. 7 dividend which i reinvest, big question is im not quite sure, would Web Services Company be a customer or competitor for them, and second off, what do you think about the companys stock. Theyre a customer, and wo joe, he is doing a fantastic job. I am a believer in cyrus 1 lets go to tom in california. Tom. Booyah. Booyah back this is tom from california. All right and i wanted some information on air row pharmaceuticals. I like the company very much. I said bye bye, lets go to bob in new jersey. Bob. Oh, boo yah, jim calling abot a stock that personalizes support services regarding fertility issues, progeny. I do not know it, and ive got to do some work. Erwin in new york booyah. I was looking for Something Interesting in the 5g space for my grandchildren and came up with keyside technologies. Youve got horse sense, that stock is on fire i have been asking about that stock over and over again. I have been lets say, how about wrong in not doing a piece on it its a good idea, and im going to do it lets go to erica in new york. Erica. Hey, hi, im so happy you took my call thank you. About ge, we own ge for so many years. Ge is tomorrow mornings business we will know in 12 hours how ge is so why dont we just wait to see, i expect nothing great from this quarter because its an entirely a redo, reset year. We have to give larry culp six more months, expect nothing great. Pamela in new york pamela hawaello mr. Cramer, my drea has come true, im talking to you. Thank you thank you very much. So listen, so you know what, i like proof point. Right. And im just wondering is now a good time . I think it is g gary steele is doing a great job. A lot of people think theyre going to derail. I still consider proof point to be a winner. That is the conclusion of the lightning round. The lightning round is sponsored by Td Ameritrade take control of your financial future with a new madmoney. Cnbc. Com. Cramers exclusive interviews, full episodes, analysis, even your own sound board, special access to mad money 101 with rules and techniques to break down the market for all investors its everything you need right when you need it. The new madmoney. Cnbc. Com. Ve do, read earnings reports, looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with Td Ameritrade. Let me tell you something, i wouldnt be here if i thought reverse mortgages took advantage of any american senior, or worse, that it was some way to take your home. Learn how homeowners are strategically using a reverse Mortgage Loan to cover expenses, pay for healthcare, preserve your portfolio and so much more. A reverse Mortgage Loan isnt some kind of trick to take your home. Its a loan, like any other. Big difference is how you pay it back. Find out how reverse mortgages really work with aags free, noobligation reverse mortgage guide. With a reverse mortgage, you can pay whatever you can, when it works for you, or, you can wait, and pay it off in one lump sum when you leave your home. Discover the option thats best for you. Call today and find out more. Im proud to be a part of aag, i trust em, i think you can too. All right, what the heck just happened to Baxter International . I mean, this is a humdrum medical supply company with a stock that just got pole axed last week. Baxter is a textbook slow and steady grower, one of my favs, makes prefilled syringes, anesthetics, pharmacy compound equipment and kidney dialysis machines its not the kind of stock you expect to lose 10 , thats what it did on thursday, before syncing another 2 on friday, i said to myself, i have got to find out whats happening with the stock of one of my fairs companies. For years baxter has been a safe haven, a longterm record of outperforming the rest of the industry since it spun off, its Drug Division in 2015. We p you should that aggressively, and promptly got bought by shyer minus touch. What went wrong. The worst possible thing that could go wrong, accounting issues on thursday, baxter reported some solid preliminary results for the last quarter, and also had grim news. They told us they were launching an investigation into misstatements into previously reported nonoperating income the problem, apparently there was something wrong with the way baxter was calculating Foreign Exchange fluctuations in intracompany transactions, using an old standard thats not in keeping with generally accepted accounting principals. When they moved money from one account to another it was reporting transactions after the related Exchange Rates were known, and that is a very big no no how much money are we talking about, baxter reported a 28 million gain in 2016, 50 million in 2017. 72 million last year 22 million in the first half of this year, so thats not nothing. Its not a nothing burger. And its kind of changed the story for me now, my normal rule of thumb for those of you and its brin writn every one of my books, accountable irregularity equals sell when things go bad and it turns out the scale of the problem was larger than management thought, the damage to your stock can be devastating and even longer lasting. Most of the time it doesnt play out. But its rarely worth the risk of sticking around and finding out. However, if anyone deserves the benefit of the doubt, its baxter such a consistently strong performer. I am inclined to look closely at the situation. Trouncing the 44 gain in the s p 500 over the same period its not easy to just leave a stock that you like. Thats one of the lessons im teaching you here. As for baxter, the company, they reported a series of Strong Quarters this is a nice steady business, consistent track record of innovation they got approval for a new insulin formulation that has a longer shelf life than competitors, last for 30 days in room temperature, two years if refrigerated im doing work in this particular area myself and ive got to tell you, thats phenomenal baxter is working on a new dialysis system, and thanks to the diabetes epidemic sadly theres a lot of money in dialysis, especially in Home Dialysis systems that make the process of filtering your blood less miserable some major margin expansion, is occurring. They have never given us much reason to doubt they could hit the targets. The same day baxter told about the accounting problem they reported numbers for the Third Quarter, the numbers were solid, up 5 on a Constant Currency basis, their operating income came in higher hthan expected. It wasnt perfect but boy theres a ton to like here unfortunately, though, in my experience over many years of investing as much as i may like the company and you know i like these guys, no amount of positive earnings can offset the damage done by accounting irregularities which is why the stock got clobbered. What do we do with baxter now . Has it become too risky to own or use this pull back as a buying opportunity in an otherwise high quality stock first its important to get a handle on the scale of the problem. Thats what you start with doing when you see these according to deutsche bank, the accounting issue might be worth 0. 07 a share. Not great, but with the stock already down more than 10 , its baked into the share price the analysts are more worried they wouldnt tell us whether theyre allowed to keep buying back stock while the accounting irregularities are investigating. Theres more uncertainty here, but business is good how much can you steady eddy medical Technology Company with a 5 organic growth, very high, and 19. 5 operating margin other firms were more negative, arguing you should say on the sidelines, the dust settles and get more clarity as much as i like baxter, i think thats where i come out. Im very conservative when it comes to accounting issues where am i, i have to tell you, im tempted to recommend baxter here, the fundamentals are good, the sales growth are accelerating, the secular tail winds that have boosted the company for years, ageing population, remain in tact, and after years of consistent execution, baxter has earned goodwill, especially since the accounting issue is unrelated to the companys actual Operational Results which would be so terrible, i would tell you sales wont sell my discipline says it doesnt matter how much you like a company, when there are account irregularities, step aside last year the Company Recorded net Foreign Exchange gains of 73 million. On top of that, the lack of detail on whether or not the company is allowed to keep buying back the shares, that did give mu pause. Baxter is not perfect. Their medication delivery in the Nutrition Business came in weaker than expected and just over 20 times earnings, the stock isnt that cheap considering these issues it is so complex when you see accounting issues, so complex, you wont say much to say lets do it, but the bottom line, baxter is a high Quality Company with a terrific track record at the end of the day, accounting irregularities equal sell, even if they dont seem like a huge deal at first glance eventually i think you can buy this into weakness we arent there yet. Either baxter needs to come down some more or we need to get more clarity on the situation until then, im urging crow to stay on the sidelines or wait things out maybe in a cleaner medical device story like an abbot labs, abt run by miles white and excellent performance that will let you sleep soundly. I am tempted, my rules say i cant. Stick with cramer. If a and d goes down tomorrow, i think you should buy the stock. I think it was a darn good quarter. I like to say theres always a bull market somewhere and promise to find it just for you right here on mad money. Im jim cramer and i will see you tomorrow welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. If they hear a great idea, theyll invest their own money or fight each other for a deal. This is shark tank. O the shark tank in hopes of fulfilling his american dream. My name is kwame kuadey. I live in ellicott city, maryland, with my wife and our newborn daughter. Coming to america was a big achievement for me, because, you know, where i come from, there are very few opportunities. I grew up in a small village in ghana, west africa. When i was growing up, we had no electricity or running water

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