Jim Cramer warns no one can stop ex ‘market darling’ from going down

CNBC’s Jim Cramer warned investors Friday that stocks of some of the new companies that have made success during the pandemic continue to fall — and that may be just the beginning.

“When your stock has no dividend backing and isn’t a fair valuation relative to earnings — assuming it has earnings as well — there’s no floor in this market. If you ask yourself, how low is it? The answer is almost always less, “”mad Moneysaid the host.

He said, “Never confuse big declines with bottoms. They are not synonymous.”

Shares fell on Friday May Consumer Price Index Inflation numbers showed hotter than expected.

Today’s falling stocks were stitch fix And DocuSignWhich Cramer highlighted as two names reflecting his warning against investing in former high-flyers.

Shares of Stitch Fix, which saw a rally during the pandemic as consumers switched to online shopping, fell 18% on Friday after the company announced layoffs on Thursday and said it expects a revenue loss in the fourth quarter. .

The company hit a 52-week low of $6.18 earlier in the day, up from its 52-week high of $64.52 nearly a year ago.

Another pandemic winner DocuSign then saw its stock drop 24% Wall Street missed expectations On revenue and earnings in its latest quarter.

The firm also hit a 52-week low of $64.30 earlier in the day, far lower than its 52-week high of $314.76 reached last August.

“These new stocks, which were coined over the past three, four, five years, have become very expensive before the peak … before they find any kind of support,” Cramer said.

He said that despite DocuSign’s steep decline, he still doesn’t think the stock is cheap enough to buy. For Stitch Fix, the stock is untouchable till the company’s core business stabilizes, he said.

“We don’t care where these former market darlings were. … we only care where they’re going,” he said.

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