We recently compiled a list of the Jim Cramer Talked About These 11 Stocks Recently. In this article, we are going to take a look at where Spotify Technology S.A. (NYSE:SPOT) stands against the other stocks Jim Cramer recently talked about.
On Thursday, Jim Cramer, host of Mad Money, discussed the current state of the market following the election, noting that it has been marked by extreme volatility, with some sectors experiencing massive gains while others have faced significant losses. Cramer observed a recurring pattern in the market:
“When it’s loved in this market, it’s really loved, but when it’s hated, I mean just forget about it. That’s been the dynamic ever since the election.”
READ ALSO Jim Cramer on Microsoft and Other Stocks and Jim Cramer’s Best Performers List: Top 10 Stocks
Cramer identified certain industries that have seen notable growth, explaining that these sectors have thrived for specific reasons. However, he cautioned that investors should be wary of jumping in too quickly, as these stocks need time to cool off before they become attractive again. In particular, he mentioned how companies with subscription-based models have been seeing a lot of attention, largely because of their steady revenue streams.
Another sector Cramer highlighted as being in the midst of a strong rally is enterprise software. He explained that companies in this space, particularly those providing essential products to large corporations, have been soaring.
While some sectors are riding high, Cramer also pointed to two areas that are currently undervalued but could see a rebound: pharmaceuticals and semiconductors. He speculated that the pharmaceutical sector has been dragged down in part due to concerns over Robert F. Kennedy Jr.’s controversial appointment as the head of the Department of Health and Human Services. However, Cramer suggested that these concerns may already be priced into the stocks.
Similarly, Cramer noted that semiconductor stocks have struggled. He said that the hatred comes from doubts surrounding the adoption of artificial intelligence-powered PCs. In his closing remarks, Cramer stressed that while there are plenty of stocks that are currently over-loved, many of them genuinely deserve the attention they’re receiving, but not necessarily at their current inflated prices.
As for sectors that seem to be in a perpetual decline, Cramer said he would be interested in buying them, but only after seeing signs that they’ve stopped falling. He added that any potential rebound will depend on greater clarity from President-elect Trump, who he believes could have a significant impact on the market, particularly with his potential to cause turbulence for many stocks.
“We need to see the floor of the abyss, unless, of course, we’re bouncing off it already. And for the overly loved, don’t look for Trump for support. He can surprise you with what concerns him. Do not get too cocky. Do not get too smug. It will hurt you for certain.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 14 and listed the stocks in the order that Cramer mentioned them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A person wearing headphones listening to an audio streaming service.
Spotify Technology S.A. (NYSE:SPOT)
Cramer commented how, despite Spotify Technology S.A. (NYSE:SPOT) missing earnings estimates, the stock climbed higher. Here’s what Mad Money’s host had to say:
“[The] second group that’s getting maybe too much love: This market is nuts for subscription products. I like these stocks too… They all have huge recurring revenue streams and membership dues, and their stocks are huge winners. All these are benefiting from endless positive research calls, they just appear each morning as if by magic… Spotify’s insane. It’s been up all year, but it just gained nearly 60 points after reporting a quarter Tuesday night that actually failed to meet the earnings estimates. Doesn’t matter, as Spotify is a subscription company and subscriptions were indeed strong. So we get a Jack and the Beanstalk-like situation, which just goes up and up and up. All very odd and yes, too much love.”
Spotify (NYSE:SPOT) is a global leader in audio streaming, offering subscription-based services that provide ad-free, unlimited access to music and podcasts for paying users, while also offering ad-supported access for free users. The company continues to experience solid growth, with its most recent quarterly performance reflecting this momentum.
Looking ahead to the fourth quarter, Spotify (NYSE:SPOT) expects to reach 260 million premium subscribers, which represents a net gain of 8 million. The company also anticipates total monthly active users will rise to 665 million, a net increase of 25 million from the previous quarter. The company’s total revenue for Q4 is projected to be €4.1 billion, with operating income forecast at €481 million. Management expects a gross margin of 31.8%, which highlights its continued focus on profitability and operational efficiency.
Overall SPOT ranks 5th on our list of the stocks Jim Cramer recently talked about. While we acknowledge the potential of SPOT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SPOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.