In a skittish market, guidance has a lot more impact on a stock than it should, says Jim Cramer

The guidance is the guidance and you know, you always have to wait and see how it plays out. That’s what the legendary Frank Sluban, one of the most successful businessmen on Earth, told me when he wanted to explain why I was willing to overweight snowflakes forecast as a way to value the stock. That was all way back in November 2022. As he saw at the forecast, it’s just a number. And in a skittish market, that number can have a lot more impact than it should. Welcome back to a very skittish market, one where investors aren’t interested in how you did. They only care about what you say you’ll do in the future. So if you aren’t offering a healthy, sharply, better than expected forecast, well, your stock is instant roadkill. This morning, Harley Finkelstein President Shopify Kim on Squawk on the Street told us not to worry about his guidance, which calls for a slight degradation and gross margin after truly blow 1/4. Does that make sense? Depends, the CFO Jeff Hoffmeister explained to the Cops school. The Shopify is expected 50 basis point gross margin decline largely comes down to and I’m going to quote you the expected growth of our lower margin payments business and lower revenue contribution from a high margin non cash partnership that will have fully amortized End Quote. To me, that’s a that’s a hanging up barely worth noticing To the market, though it was a disaster that caused Shopify to lose nearly 20% of its value in a single session. Uber report a fantastic quarter, showing strength across the board. But for some attenuated reason, management guided for gross bookings of 38.75 billion to 40.25 billion, ever so slightly weaker than expected. That was enough to knock almost 6% off the stock. Kind of ridiculous given how hard it was to figure out why Uber even gave such a cautious forecast. But sloopman’s law, the guidance is the guidance, so management must know something or they wouldn’t be so circumspect. Or at least that’s how Wall Street sees it. We saw the same thing with Upstart, the artificial intelligence based lender that used to be a market drawing for the stock peaked at the end of 2021. Upstart had a terrific quarter, but the outlook was suboptimal and the stock dropped 5.5%. Is that fair? Look, it’s just a number, but the number means something in a market that’s sensing A slowdown. It’s not just today Dated Dog, a truly terrific enterprise software company does digital infrastructure monitoring analytics. So its stock fall from 127 to 112 yesterday because well its second quarter earnings guidance was a penny short. Stock rebounded 117. Today’s cooler heads prevailed, but it’s still way down from its pre quarter highs. But you know, it didn’t bounce back today. Disney Now here’s a company imported terrific quarter yesterday in a vacuum. It would have sent the stock much higher. However, there’s no such thing as a vacuum on Wall Street. Disney CFO Hugh Johnson gave us a frank sluban bomb of a forecast quote as it relates to demand while consumers continue to travel in record numbers. Hey, so far so good. And we are still seeing healthy demand. I don’t like that word. Still, we are seeing some evidence of a global moderation from peak post COVID travel. That’s what took Disney from 116 to 105 yesterday. No real rebound today. Now there are times when I think we need to take all these forecasts with a grain of salt. If the Fed starts cutting rates, I can see buying some of these stocks, although they’re not the first ones I’ve reached for. In that scenario, I would prefer to go, say, for Builders First Source, a home building supplier with a stock that fell 19% yesterday on soft guidance that one should react immediately to a rate cut. But either way, you need to understand in this market, even though the guidance is just the guidance right now, the guidance is all that matters. Dead money’s back after the break. Don’t miss a second of Mad Money follow at Jim Cramer on X. Have a question? Tweet Kramer Hashtag Mad mentions Send Jim an e-mail to [email protected] or give us a call at one 807 four three. CNBC. Miss something? Head to madmoney.cnbc.com.