Opinions
Jim Cramer - Mad Money
JFrog Ltd.
FROG-Q
BUY ON WEAKNESS
Sep 16, 2020
$64.790
Stock price when the opinion was issued
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COMMENT
What he calls one of 15 Red Hot stocks: unstoppable growth stocks with a sky-high valuation (30-100x sales, not earnings)
Thank of them as a software developer software developer. Recently it went public. The stock has tripled YTD, because it's a textbook Covid play. The bar is set pretty high, priced at 44x next year's sales.
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DON'T BUY
They didn't blow away their numbers. You have to when expectations are so high (this is a speculative stock). Even Adobe blew away numbers last night, but sold off today.
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IPO'd today. Likes it. It was priced at $44, opened at $71, pulled back to $51 and closed at $64.79. FROG is a cloud platform for development operations (dev ops) which means it allows engineers to collaborate between departments within a company. They bridge between the development and operation teams. FROG customers include Facebook, Spotify, Google, Netflix, Cisco, Oracle and Dell. It boasted 65% revenue growth in 2019 and 50% the first half of this year, based on recurring subscription revenue for its services. First half this year came within $500K to break even, so debt is lowering. He expects them to be profitable in 2021. Has a lot going for it, but its valuation is already at nosebleed levels. A great stock, but too high already.