CNBC’s Jim Cramer said Monday he believes long-term investors should be willing to buy shares of Amazon, Apple and Salesforce as technology companies face pressure due to rising bond yields.
However, the “Mad Money” host said at the moment there’s one tech giant in which he has less confidence: Facebook.
“Right now, Facebook sells at 25 times earnings — that’s cheap — because people are worried that the advertisers are going to abandon them,” Cramer said, noting Facebook just announced it’s decided to pause work on developing a version of Instagram for kids. That move comes shortly after a series of recent Wall Street Journal articles that said Facebook repeatedly found its Instagram to be harmful to some teenagers.
“Compare that to Apple or Salesforce or Amazon — nobody’s afraid they’ll lose tons of customers because they’re truly best of breed. That’s why I think their pullback is definitely a buying opportunity,” Cramer said, following a session in which all three companies closed in the red.
“You can buy these stocks when they’re down because you know management is going to figure it out. Amazon will automate,” he said. “Apple will find a way to build all the phones it needs. [Salesforce CEO Marc] Benioff will buy whatever companies Salesforce needs to stay competitive, like he did with Slack.”
While Cramer’s charitable investment trust currently owns Facebook, he said he believes the social media company’s potential to be viewed as a “best of breed” currently “hangs in the balance.” The company cannot be only an earnings juggernaut, Cramer said. It also needs to truly commit to being a “single source of truth on the web,” he contended.
“I do indeed have faith that CEO Mark Zuckerberg can pivot, even if he thinks he’s doing everything in his power to make his site safe. It’s not up to him, though. He needs to find a way to solve the credibility problem, otherwise Facebook will become an also-ran,” Cramer said.
Cramer said he believes Zuckerberg “can pull it off,” but the company won’t be in the same category as Apple or Amazon until that happens.
“While tech gets slammed by this rotation, you need to remember that best of breed companies don’t just go away. If you’re in it for the long haul, these stocks are worth buying on the way down,” Cramer said.
Disclosure: Cramer’s charitable trust owns shares of Apple, Amazon, Salesforce and Facebook.
