Jim Cramer says investors are figuring out what to pay for companies that aren’t making money today, but could make a lot of money in the future.
Some days, like today, nothing works, Jim Cramer admitted to his Mad Money viewers Thursday, after another major selloff on Wall Street. The sellers just can’t take the pain and they’re heading for the exits in droves.
Cramer said we’re in a period of “great readjustment,” where investors are figuring out what they’re willing to pay for companies that aren’t making money today, but could make a lot of money in the future. They’re also weighing what to pay for companies that used to make a lot of money, but now make less with rising interest rates and a slowing economy.
“The smooth ride we’ve had is over. In this market you need a helmet,” Cramer quipped.
Case in point: Block (SQ) – Get Block Inc. Class A Report. This payments company, formerly known as Square, rose from $200 to $280 a share last year, but has been falling since August, including another 9.6% Thursday. Why? Investors simply aren’t willing to pay last year’s prices. It’s the same story with Affirm (AFRM) – Get Affirm Holdings Inc. Report, which has plunged from $168 to just $21 a share. Both of these stocks were expensive, and they don’t offer dividend protection for investors.
There are still hundreds of stocks that he likes, Cramer said, but there are thousands that just don’t work right now.
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