Mad Money 04/30/25 | Audio Only

Key Concepts

• Bankable Jockey: A proven and successful CEO or leader who can turn a company around.
• Throughput: The efficiency and speed of service, particularly in the context of Starbucks.
• Same-Store Sales: A key retail metric measuring the growth in revenue from stores open for at least one year.
• Magnificent Seven: Refers to the top-performing tech companies, including Microsoft and Meta.
• Constant Currency: A method of presenting financial results that eliminates the effects of fluctuations in currency exchange rates.
• Generative AI: Artificial intelligence capable of generating new content, such as text, images, or code.
• Capital Expenditure (CAPEX): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment.
• Meme Stock: A stock that has seen its price driven up by social media hype rather than traditional financial analysis.
• Tariffs: Taxes imposed on imported goods.
• Dollar Index: A measure of the value of the U.S. dollar relative to a basket of foreign currencies.
• Commercial Hedgers: Participants in futures markets who use contracts to reduce the risk of price fluctuations in their underlying business.
• Cycle Analysis: A technical analysis technique that seeks to identify recurring patterns in market data.

Starbucks Turnaround

• Problem: Starbucks stock was being dumped despite the appointment of Brian Nickel, a CEO with a proven track record.
• Nickel's Track Record: Previously turned around Chipotle, increasing the stock by 776% during his tenure.
• Nickel's Actions:
  • Addressing stores directly to improve performance (already addressed 2,000, working on 3,000).
  • Fixing throughput issues, reducing average wait time to 4 minutes.
  • Reversing excessive spending on machines and focusing on people.
  • Stabilizing the Chinese division.
• Argument: The market is wrong to undervalue Starbucks given Nickel's leadership and early progress.
• Analyst Inconsistency: Analysts who previously recommended buying Starbucks above $100 now hate it at $80.
• Conclusion: Bet on the "jockey" (Nickel) to turn the company around.

Microsoft and Meta Earnings

• Microsoft:
  • Led by CEO Satya Nadella, reported "terrific" numbers with top and bottom-line beats.
  • Intelligent Cloud division up 22%.
  • Azure concurrency revenue growth of 35%, exceeding analyst expectations.
• Meta Platforms:
  • Revenue grew 19% in constant currency, exceeding expectations by nearly $1 billion.
  • Earnings per share up 37% to $6.43, more than $1 over consensus.
  • Family daily active people reached 3.43 billion, up 6% year-over-year.
  • Meta AI has almost 1 billion monthly active users.
  • Second-quarter revenue guidance of $42.5 billion to $45.5 billion was in line with expectations.
  • Increased 2025 capital expenditure forecast to $64 to $72 billion, benefiting Nvidia and the AI complex.
• Conclusion: Both companies demonstrate the importance of having proven leaders at the top.

C3AI vs. ServiceNow

• Caller Question: Whether C3AI will benefit from government contracts like Palantir and Anduril.
• Kramer's Response: No, C3AI keeps losing money.
• Alternative Recommendation: ServiceNow, led by Bill McDermott, is a leader in AI.
• Argument: Bet on leaders of great companies like McDermott, Nadella, and Zuckerberg.

Yum Brands (KFC, Taco Bell, Pizza Hut)

• Solid Quarter: Yum Brands reported better-than-expected same-store sales growth, particularly for Taco Bell and KFC.
• CEO David Gibbs: Emphasized the resilience of their model and ability to win in any environment.
• Shareholder Returns: 15% annual shareholder returns over the past 20 years, compared to 10% for the S&P 500.
• Scale: 60,000+ units, opening a new store every other hour.
• Growth: KFC international unit growth 7%.
• Franchise Model: Franchises are experiencing two to three-year cash paybacks on new units.
• Tariff Impact: Insulated from tariffs as most of their supply chain is sourced within the country.
• Middle East Recovery: Recovering from challenges in the Middle East, with KFC International up 3% in same-store sales.
• Nvidia Partnership: Implementing voice AI in over 500 Taco Bell drive-throughs, improving employee satisfaction and reducing turnover.
• Gibbs' Retirement: Announces retirement in the first quarter of next year.
• Conclusion: Yum Brands' model is successful due to growth, a strong franchise system, and adaptation to consumer trends.

Dollar Strength Prediction

• Weak Dollar Benefit: A weak dollar benefits American companies with overseas business by making exports less expensive and increasing the value of foreign revenue.
• Larry Williams' Prediction: Legendary technician Larry Williams predicts the dollar is about to turn bullish.
• Indicators:
  • Dollar Index vs. Gold: The dollar is undervalued compared to gold, suggesting a rebound.
  • CFTC Commitments of Traders Report: Commercial hedgers are net long in the dollar index futures, indicating an upward move.
  • Williams Sentiment Index: Newsletter writers are very negative on the dollar, a counter-trend sign.
  • Cycle Analysis: A 32-35 week cycle suggests the dollar will rise from now through September.
• Conclusion: Charts suggest the recent weakness in the dollar has run its course, and it may be time for the greenback to get stronger.

Logitech International and Tariffs

• Tariff Impact: Logitech withdrew its full-year forecast due to the uncertainty of the tariff environment.
• Q1 Results: Mixed results with a slight revenue miss but a solid earnings beat.
• Mitigation Strategy:
  • Moving Chinese manufacturing footprint to other countries.
  • Implementing targeted price increases to protect margins.
• Manufacturing Diversification: Manufacturing in six countries, with only 40% of products coming from China currently, expected to drop to 10% by the end of the year.
• Targeted Price Increases: Surgical approach, varying price increases product by product based on price point and role in the portfolio.
• Grand Theft Auto 6: While a major event for gaming, Logitech's business is not dependent on one game.
• Conclusion: Logitech is mitigating the impact of tariffs through manufacturing diversification and targeted price increases.

Lightning Round

• United Health Group (UNH): After being negative from $630, Kramer would start a position at $400.
• Churchill Downs (CHDN): Kramer is not a fan, calling it a "one-trick pony."
• Super Micro Computer (SMCI): Kramer is sick of Super Micro and recommends Dell instead.

Tariffs and American Consumers

• Lack of Clear Policy: The White House needs to lay out a coherent policy regarding tariffs, including specific goals.
• Consumer Confusion: Consumers are confused about why they are experiencing higher prices.
• Impact on Companies: Great American companies like Nvidia and Apple are being negatively affected.
• China's Role: The goal should be to change the way China does business, but this will result in higher prices for consumers.
• Need for Explanation: The American people deserve clear explanations about why tariffs are being implemented.
• Conclusion: The White House needs to provide a clear and constructive explanation of its tariff policy to the American people.