“In fact, though, they have everything to do with each other,” the “Mad Money” host said. “They’re all about the revolution in how the consumer spends his time, but the analysts and skeptics who abound everywhere just can’t seem to get their darned heads around it.”
With the experiential economy in full swing, it came as a surprise to Cramer that movie theater giant AMC’s earnings pre-announcement was drastically weaker than expected.
Shares of AMC took a nosedive on Wednesday after the company reported a $178 million loss and 4.4 percent decline in the U.S. box office.
Cramer said the only explanation for these “seismic” declines was the rise of the experiential economy.
“People want document-able, record-able experiences,” he said. “Unless they can go out and create memories they can share with their friends online, they mostly watch things at home and order delivery instead of driving to restaurants.”
The “Mad Money” host pointed to Royal Caribbean’s post-earnings conference call with its CEO, Richard Fain. Fain said that instead of spending money on televisions and cars, consumers “seem to be buying memories as never before.”
The CEO added that this trend was global, not just U.S.-based. As the chief of a cruise line marketing experiences and memories, he said it played to Royal Caribbean’s “sweet spot.”
Cramer also nodded to the various social media platforms benefiting from experiential trends. Consumers record their memories via Facebook, Instagram and Alphabet’s YouTube. They scroll through and watch their friends’ memories on Apple devices, sales of which are booming.
“How do we know this? Because we heard it on the AT&T call. Specifically, in reference to their Time Warner acquisition, management explained that people are watching Time Warner on their handheld — again, widescreen handhelds like the iPhone 7 Plus,” Cramer said.
Beyond that, over 30 million people in the United States play video games. Gamers and eSports fanatics are growing in number rapidly, and watch roughly a billion hours of YouTube videos per day.
Paired with the rise of shopping on Amazon, binge-watching Netflix and tuning in to HBO or weekend football games, it is difficult to ignore that the ways people spend time nowadays are shifting in home-bound, tech-savvy ways.
“It’s a simple thesis. The create-memories-to-watch thesis coupled with video games and internet programming best watched on the go, but not driving, at home or going to the movies,” Cramer said. “And, of course, we’re ordering food via Uber and GrubHub.”
Note the commonality of FAANG, Cramer’s extended acronym for the stocks of Facebook, Amazon, Apple, Netflix and Google (now Alphabet).
All of these tech giants are capitalizing on the changing habits of the general populous, habits that Cramer believes remain misunderstood among some experts on the Street.
“But as long as this shift continues, you can keep owning FAANG. It’s only getting more pronounced, as is the ‘A,’ as time goes on, which means these stocks can all still go higher,” the “Mad Money” host said.
Disclosure: Cramer’s charitable trust owns shares of Apple, Facebook and Alphabet.
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Source: Tech CNBC
Cramer zooms in on how the stay-at-home economy is affecting earnings