Cramer Remix: Pinterest is interesting, but I'm hesitant to buy it

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Pinterest will soon go public and there is cause for concern that investors should pay attention to, CNBC’s Jim Cramer said Friday.

“Pinterest has a neat concept, and even though I’m definitely not the target demographic, I can see that it’s a fabulous platform for advertisers,” the “Mad Money” host said. “That said, unless you can get in on the actual IPO, I’d be very hesitant to buy this stock above the price range.”

The social network-cum-catalog of ideas helps users discover things that interest them and other content that they aren’t privy to.

Cramer noted user growth in the U.S. has started to cool off as the company expands overseas. It registered 184 million monthly average users in the fourth quarter, up from 160 million in the same period of 2017 and up from 90 million the year prior.

Average revenue per user increased 25% in 2018.

“Given that they make $9 per user in the United States and just 25 cents per user in the rest of the world, the company still has a ton of room to monetize their international business,” he said.

One red flag, Cramer noted, is that Pinterest is that the platform is fed a lot of clicks through Facebook, which means that usage numbers could change if Facebook changes its authentication system as it did last year.

Still, Pinterest’s financials are “pretty amazing,” he said. Revenue growth was 60% in 2018, up from 58% in 2017, and gross margin expanded from 46% in 2016 to 68% in 2018.

Furthermore, Pinterest looks to be in position to eventually turn a profit, Cramer added.

Pinterest expects revenue growth to register as much as 54% in the first quarter, according to its guidance it provided on Monday. The company plans to sell 75 million shares at $15 to $17 per share when it goes public.

“I think there’s some price where Pinterest is absolutely worth owning — it’s a good story, even if it’s not perfect,” Cramer said. “However, as we saw with the botched Lyft deal, valuation really matters.”

Get his full thoughts here

The major U.S. indexes all rallied Friday on the backs of Walt Disney, J. P. Morgan Chase, and Chevron, but Cramer warned that “this positivity” will be hard to sustain.

The Dow Jones Industrial Average moved forward nearly 270 points, the S&P 500 advanced 0.66%, and the Nasdaq Composite added 0.46% during the session.

“Even though earnings season kicked off with an amazingly bullish bang, we’ll be right back where we started from once next week rolls around,” the “Mad Money” host said.

“In the cacophony of earnings reports next week, remember that this market has no memory. Today was terrific, but come Monday we’re at the mercy of the next news cycle.”

Click here to see what Cramer has circled on his calendar next week

Bristol-Myers Squibb CEO Giovanni Caforio told CNBC the company is “one step closer to creating that great company” after shareholders greenlit a $74 billion takeover of Celgene.

He expects that the deal for the cancer drugmaker will close in the third quarter.

“When the two companies come together, we’ll have two growing businesses,” Caforio said in an interview with Cramer. “We’re going to be able to launch six new medicines, potentially, in the next two years. It’s going to be a great company, [will] create value for shareholders, [and will be] very good for patients.”

Read more here

J. P. Morgan Chase’s top retail analyst Matthew Boss hosted the bank’s 5th annual Boss’ Retail Round-Up Conference earlier in the week. Cramer checked in with Boss to get a better understanding of what the analyst learned.

Catch the discussion here

Friday had “transformative” news but it was not a “transformative” day of trading, Cramer said.

“Depending on what happens Monday, we could go right back to the grind because the cards they have no memory,” he said. You’ve gotta feel more sanguine about a market where so many phenomenal things can happen out of nowhere and we [have] not just even thought about 24-hours ago.”

Cramer explains here

Disclosure: Cramer’s charitable trust owns shares of Facebook, Walt Disney, and J. P. Morgan Chase.

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