CNBC’s Jim Cramer said Tuesday that big techs could be tough to own now that federal regulators have turned their attention to investigate their competitive practices.
“I do fear what Justice [Department] and the FTC [Federal Trade Commission] can do to these companies,” the “Mad Money” host said.
Apple: The U.S. Justice Department reportedly wants to crack down on Apple’s use of the App Store on the iPhone to take a 30% cut of software sold on its platform. The company is in a tough spot facing headwinds in a federal investigation and the trade war between the U.S. and China, Cramer said.
Alphabet: The Google parent faced pressure after the Justice Department reportedly planned an antitrust investigation of the search engine giant. The company has the ability to tilt its search engine against businesses they seek to compete with, Cramer said.
Facebook: The social media giant has leveraged its platform to steer users away from competitors and sell data to the highest bidder, Cramer said. Even if businesses choose to advertise on another popular platform, Facebook has its grasp on the industry by owning Instagram, he said. The FTC is gearing up to investigate the company’s hold on the digital space.
“Regardless of how you feel about the issue, these stocks are less attractive than they were just 48 hours ago,” Cramer said. “They are now in the crosshairs – even if they don’t deserve to be. And I think that most don’t, one does. It’s not a good place to be.”
Wall Street pulled off its second best day of the year Tuesday after stocks suffered two days of “endless panic,” Cramer said. Investors got a whiff of optimism about trade with China and Mexico, and the market surged.
“Yesterday, the proprietary oscillator I follow hit negative 5, signaling that the market had gotten oversold, which is why I told you it was time to buy,” the host said. “That’s the real reason we could explode higher today on some chatter from foreign officials and the Federal Reserve – the market was like a coiled spring.”
The Dow Jones Industrial Average added more than 512 points, while the rallied 2.14% and the Nasdaq Composite gained 2.65%.
Still, Cramer warned viewers not to be too bullish because the environment is still volatile. The host worries that the market has a “ridiculously short memory.”
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Digital customer transformation
Salesforce is taking advantage of the “massive” digital customer transformation, CEO Marc Benioff said.
The cloud software company claims 16.8% of the global market share, trumping the 5.7% market share of its closest competitor, Oracle. Salesforce delivered an earnings beat Tuesday, reporting 32 cents per share for the first quarter of its 2020 fiscal year.
The digital customer transformation “is as big as Y2K was for the tech industry,” Benioff told Cramer. “We’re No. 1 in [customer relationship management], which is the fastest-growing part of enterprise software, because every company and every industry and every government [agency] is recreating themselves with their customer, so this is what’s driving our growth.”
Read more about the interview here
Chipotle Mexican Grill CFO Jack Hartung on Tuesday assured Cramer that potential tariffs on Mexican imports will not have a noticeable impact on the company’s bottom line.
“This event won’t impact us,” he said, when asked how higher sourcing costs could affect earnings. “This is gonna have a minor impact. … We buy a number of items from Mexico, but we spend about $1.6 billion a year on our ingredients. [The tariff] is an impact of about $15 million this year, a little bit more next year. “
As President Donald Trump threatens to slap 5% duties on all Mexican goods from next week, along with a series of rate hikes in the coming months, Hartung said the food company is “committed” to sourcing and producing their dishes from fresh ingredients.
Go deeper here
Cramer sat down with Emergent BioSolutions CEO Robert Kramer Sr. to hear how the biopharmaceutical company is approaching drug pricing and seeking to make Narcan, which helps reverse opioid overdose, more affordable and accessible.
Catch the interview here
Cramer’s lightning round: I should’ve gotten behind this stock when it was lower
In Cramer’s lightning round, the “Mad Money” host gave viewers his thoughts on their stock picks in rapid speed.
Amag Pharmaceuticals: “I know that it’s way too speculative, honestly. There are some really great drug stocks that are down so much, why not just go buy Lilly. “
Benefitfocus: “Well that’s a cloud-based company. I mean look, I’d rather see you in one of our [cloud] kings. ServiceNow would be in there, Workday, and of course Salesforce.com. “
CME Group: “CME is a winner and I feel like I should’ve gotten behind it when the stock was much lower. It’s never too late.”
Disclosure: Cramer’s charitable trust owns shares of Salesforce.com, Alphabet, Apple, and Facebook.
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