Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday November 19.
Tesla (TSLA) Trades On Raw Emotion
Tesla (TSLA) is being traded not on fundamentals, but on "raw emotion." CEO Elon Musk agreed that the National Board of Transportation should investigate the causes of the 3 reported fires that broke out in Tesla cars. Even though the stock rose slightly on this news, the shorts are declaring the downfall of Tesla on the news and predict recalls that will slow the company down. Tesla is classically overvalued, but whether or not it will remain overvalued might depend on the outcome. Bulls claim that the stock has already fallen enough on the scandal of the fires that the problems are baked in, and point out that sometimes fires start in cars of other companies. Meanwhile a quarter of Tesla's shares are sold short, but bulls keep on buying, regardless of valuation. Cramer said, "Tesla is the most removed from the fundamentals of any stock in the market." There is so much emotion surrounding this "cult stock," that it is hard to do an objective analysis of it.
Workday (WDAY) is a leader in cloud-based services for human capital management. The company is successfully taking market share from Oracle (ORCL) and SAP (SAP), and has seen a 163% gain since it came public last year. Since WDAY is innovative and growth-oriented, Cramer thinks it has more room to run. WDAY grew revenues last quarter by 70%. When asked about "big data," CEO Aneel Bhusri explained that "Big data is a misnomer. Most companies don't have big data. They have a variety of data," that must be incorporated. Bhusri says the company doesn't compete with Salesforce (CRM) but works together with CRM to "tie our systems together." While some believe WDAY is overvalued, Cramer thinks it deserves a high valuation, given its growth potential.
CEO Interview: Jeremy Stoppelman, Yelp (YELP)
The typical social media IPO is just a flash in the pan, but Yelp (YELP), an online yellow pages and review site, is worth buying. The IPO priced at $15, rose to $22 and remained range bound for a few months. The stock has tripled year to date, but has recently seen a dramatic decline because of a secondary offering. Cramer thinks it might be worth getting in on the secondary. Yelp has benefited from mobile, where 40% of its ads appear: "When do you need local reviews?" posited CEO Jeremy Stoppelman, "When you are on the go."
Mobile allows the company to do "incredible targeting." Yelp has reviews of businesses in 100 cities worldwide. When asked how Yelp can encourage people to write reviews, Stoppelman responded that the nature of social media causes people to want to comment on their experiences, such as dining out. "It's self-expression. They want to share with other people." When asked if negative reviews might discourage some advertisers, Stoppelman commented that most reviews are neutral or positive, and even in the case of negative reviews, "The cat is out of the bag anyway," indicating that dissatisfied customers may be Tweeting or Facebooking their negative comments as well. When asked about when Yelp will be profitable, Stoppelman responded that Yelp could be profitable, but right now, it is time to grow the company.
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