>> just watching tim play tambor even like you saw is worth the price of admission across the street there. >> as opposed to the drums or singing. >> cisco. the csco kind. people say it's a negative. i say positive. >> all right. i'm melissa lee. thanks for watching. see you back here tomorrow at 5:00 for more "fast." m "mad money" starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job is not just to entertain but to educate and teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. we understand the term better than expected. we know that when a company reports sharply better than expected numbers, its stock goes

up like alphabet nee google stock did. we also know when a company comes out with worse than expected numbers followed by the dreaded words "cuts forecast" as was the case after hours with amazon, the stock gets clobbered. but how about another category? a whole new one. it's causing stocks to jump today. the category that i want to call not as bad as we thought. the not as bad as we thought thesis helped get the averages from getting too hard today, s&p declining 0.3 percent. let me give you some prime examples. number one not as bad as we thoughter. why, it's bristol myers. not that long ago it was the gold standard, the go to name in the pharmaceutical business because it had the biest growth of all the old line pharma companies. some called it a biotech stock in disguise because of its

massive rerating. the winningest anti-cancer franchise out there thanked to the break through drug opp tivo. you may have seen the ads for this one, the ones that encourage you to ask your doctor to try opdivo as it gave a lot of hope that a real wonder drug was upon us. but a few months we learned it wasn't all that wond russ. it failed to meet some end points in a lung cancer study that cause the to stock to the mid-50s immediately. then when still one more study came out showing this drug had inferior character ticks to merck's keytruda, bristol-myers broke down to $49 as the market judges it was just hype, not substance. today bristol-myers reported and they had some good things to say about opdivo and some of his other drugs. short sellers have been swarming over the stock because it seemed like the second coming of a valiant, a very unfair

comparison that nevertheless got around. well, they were stymied because as poorly as this company has played its hand when it came to promising opp dee escrdivoopdiv they were positive today. the quarter simply wasn't as bad as people that it would be. the stock rallied more than 5%. i actually think bristol-myers is promising too much but today's gains are based on the fact the company didn't blow up a third time. just as owners get disappointed and sell their stocks when te don't like what they see, short sellers get disappoint when there is good news and they have to cover their positions, which then sends the stock higher. that's the truth behind bristol's big move, one that i don't trust as much as i'd like to because it's based on the company not screwing up badly again. i felt the same way about cheesecake factory and buffalo wild wings, both reported last night. as far as i'm concerned, the numbers were nothing to write home about. wall street was looking for 1% to 2% growth from cheesecake factory, and the numbers came in at 1.5%.

hey, that's not better than expected. that's just not as bad as we thought. a tech stock that delivered that kind of number, one that failed to beat the top line, would be slaughtered. when it comes to the restaurant business, if you do a number right now because the consumer seems to be so strapped that's in the middle of the range, you know what you are? you're a hero. no wonder cheesecake's stock rallied more than 5% today and actually hit a 52-week high. because it wasn't as bad as we thought. in fact, the restaurant business is so bad right now that when people -- that people loved, loved, loved it when buffalo wild wings predicted its franchises would have minus 1.70 franchise same-store sales, that's right, down 1.7%. and what happened some it kwam in at minus 1.6%. the fact that it was a negative sales number, that didn't matter. the stock went up over $8 today or 6%. it's almost stupefying, isn't it? but that's how bad this industry

is. in the land of the blind, the one-eyed restaurant chain is indeed king. twitter almost pulled this off today. came very close. emphasis of course is on almost. the stock was flying high in the morning because the trajectory of their daily average users was positive. twitter was supposed to report a horrendous number. part of that whole process by which the company was unable to sell itself. amid all of the other rancor and bad will that developed during a process that was played out way too publicly for many was the belief that when teert next reported, it would deliver numbers so disappointing that the stock would go right back to the $14 level, where it was before all the takeover hoopla started. but twitter didn't do that. it managed to report the kind of disgustingly -- it did not the disgustingly terrible quarter that investors had anticipated. for a little while it looked like twitter's stock was going

to break out for good. then we learned the company was shutting down vine. that was something at one point speculators thought would be the reason for someone to acquire twitter. so the pre-earnings desperation came back to life. it didn't help they trimmed their forecast either. my take? listen. it's a little different from a lot of people's today. you know what? i think genuinely it wasn't as bad as i expected it would be. twitter did beat on both revenue and earnings. plus i think this number makes it more likely that twitter can come back into play. that's right. you heard me. especially if they develop something that can use machine learning to actually knock off the trolls, which i keep telling you is very important to the valuation. if they do that, i am saying right here, right now, that potential acquirers will come back, and this company will be bought by someone else who can use all that data to help their clients make better decisions about what consumers want and where they're advertising dollars could be best spent. but, see, it's a one-two punch.

first twitter has to fix the troll problem, making it more of a community that people want to go to or not be scared by, and i think they could be doing that. then they have to keep the process of the sale quieter. it got totally out of hand the last time the company put itself up for the sale or was being sold, to the point where it became $29 a bus, for $29 a share, there was nobody willing to buy this thing, correctly since the acquirer's stock would have been pummeled at that price tag. i think the discipline of closing vine and chopping heads, while at the same time showing some growth, is going to make twitter more attractive to buyers. but, again, not until the troll issue is dead and buried because the shareholders of any potential suitors might despite twitter for its inability to tamp down the hate even as they can't keep their eyes off it to see what's happening. believe me, they continue to fix things up, and a google or a salesforce will be right back there kicking the proverbial tires. finally there are companies that recognize they can change the

coloration of what people think about them and manage to make their stocks soar. for years qualcomm just kept disappointing wall street. manageme management was beside itself. how the heck does a company like that make wall street see that it isn't as bad as they think it is? how about by making a big acquisition that changes the company's stripes from a so so cell phone chip play into an internet of things ubl semiconductor company with some terrific cell phone technology on the side. that's what happened today when we learned qualcomm is plunking down -- you can follow along for at actionalertsplus.com. qualcomm stock actually jumped more than nxpi's. why? it's not as bad as we thought. it's great to be better than expected, but in this market, i'll gladly take not as bad as

we thought. why bother to look through it? the darn strategy is working. patrick in florida, patrick. >> caller: how are, you jim cramer? >> good day for me, patrick. how about you? >> caller: excellent. thanks for asking. jim, a question for you. i'm long on tesla, and with their recent earnings report and solar city activity, i'm wondering what your thoughts are on their growth and stock appreciation. >> patrick i think if we're not buying solar city, i think that stock would have up very big on that quarter even though it was aided by some credits. but because they are buying solar city, the stock stalled, and that is the issue in my eyes. i need to go to charles in missouri. charles. >> caller: hey, jim. i live in a small town in the boothill of missouri. walmart just announced closing of our local store in january of 2017. we've had a store here for 40

years. in light of the jet.com purchase by walmart, are small stores like ours sacrificial lambs, and what does this mean for the stock in the company's future? >> well, charles, it is true that walmart is actually closing some stores they think are underperformers and i think it's about time. i feel bad they closed your store. the jet.com acquisition is very important. i continue to support exactly what doug mcmillan is doing, and he is always welcome on "mad money." how about kevin in tennessee? kevin. >> caller: mr. jim. i have owned tractor supply for years, and it's performed great until its recent decline of 30%. do i buy, sell or hold? >> oh, boy. you know, that was such a bad quarter, and i kept thinking when they reported their actual number after they first said that things would be bad, that it was time to pull the trigger. but i have to tell you something. now we got to wait for tax loss

selling before i can say it is time to buy tractor supply. it's not outstanding. it's not even great. really it's not even good, but it is not as bad as we thought. and right now that's enough for wall street. on "mad money" tonight, it's helping zillow, h&r block, and kimberly-clark connect their businesses. could it help your portfolio as well? i'm sitting down with the ceo of service now. then the neglected sectors are alive with the sound of profits. i'll tell you which ones beaten down are suddenly showing signs of life. and groupon closed down more than 20% today but it's still up over 30% for the year. is the deal of the day good or should it be avoided? i'm talking with the company's ceo, so stick with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a

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look at this tremendous rally in service now, the software play we've liked so much on "mad money." here's a company that helps corporate information technology departments to develop their own internal applications as well as providing software that can help its clients generate non-revenue functions. i've always thought that servicenow is a well run company with a terrific nearby, aiche. the company reported a two cent earnings beat with in line revenue up 37% year-over-year. very bullish guidance for both the next quarter and the full year. management talked about extremely valuable new clients on the conference call. you can understand why the stock is 7% higher today and it was even higher at one point. let's take a closer look with frank slootman to find out more about the quarter and the company's prospects. welcome back to "mad money." >> thanks, jim. it's going to be with you again.

>> how can you accelerate revenue growth in this environment? >> well, it's a function of us really hitting on all cylinders when all our channels, all our geographies, and a lot of new product segments are all kicking in at the same time. you know, you go into overdrive and you sort of saw the effects of that. >> i saw there was a contract in finance. i know a lot of banks have been hobbled together over time and they all have different kinds of -- all the different kinds of systems all over the place. was this giant contract one of those where a bank had made acquisitions of other banks and they really finally had to get it together? >> yes. typically -- well, what you see here is that these very large institutions are sitting on large numbers of disparate

legacy systems and they're going through a process where they want to massively consolidate and standardize on a fresh new platform. >> all right. n now, when i see that you do hr, the first thing i say, wait a second, we have a neil bush on, and work day is so great at hr, how can they be going up against servicenow? you guys are actually partners. can you explain how that partnership works? >> yes. i mean we're customers of workday as well, and workday is a customer of servicenow, so we actually have a very good value added relationship. we're really focused on processing the work that comes into hr organizations, people, employees and large companies have a constant flow of requests, issues with paychecks and so on. that work flow is run through servicenow. sometimes that results, interchanges into workday as well if it's a change of address

or a new member of the family, anything that changes the actual record, that goes into workday. but we typically, our systems are deployed across functional boundaries. in other words, we're not just launched to support hr. we're also launched to support i.t. facilities, legal, and markets, and large enterprises want to have one service experience, not one unique to each service area. >> but, frank, would i know that i'm inputting a question to servicenow, or would i think i'm just inputting a question to the company? >> that's exactly the point. you know, you don't need to know who you're talking to. >> interesting. okay. now, you want a piece of business with a company that we have long favored for about 140 points, constellation brands. i know it's a new piece of business so we don't have to get into what you're doing with them right now. but why would they be attracted to servicenow, and who else would they be thinking of doing? why do you win that business? how come you get that contract? >> well, we win for a variety of

reasons. but, you know, typically there's a big modernization effort under way where, you know, companies are trying to consolidate and refresh in terms of architecture, in terms of platform, and set ourselves up for 10, 15, 20 years to really have a platform that they can build on over that period of time. at the same time, they're looking for transformations. they want to change the service experience that they historically have had, something that is much closer to the consumer experience that you get in online retailing, online banking, and so on. and then finally, we're also looking at redefining the economics, the cost structures. organizations are always looking to take out big chunks of cost, and that's very much central to the big initiatives that we do with these companies. >> but you also deal with companies take like a zillow. when it was a smaller company, you probably did a lot of things on paper. when it's millions of people are logging in every single day,

it's a different story. so they would bring in a servicenow to be able to make sure they see correct patterns, know if there's something wrong within their organization? >> well, first and foremost, we got to make sure that the zillow infrastructure is always in the air and available for their end user clientele. so we play a very critical role to making sure that zillow's service experience is available and performs and so on. >> all right. last question. did you chuckle when you saw the e-mail that was released from colin powell -- they actually cracked his e-mail box -- which said that you were a target of salesforce? i know that you and mark are friends, and i don't think there was really anything going on at all. >> yeah, i don't think that many people realize, but, you know, ceos talk. not just ceos talk, but everybody talks in silicon valley. you know, it's not always about m&a. we compare notes on many things. it's very informal. all companies maintain lists of

assets they're interested in. it's not quite as eventful as i think the industry observers are making it out to be. >> all right. thank you so much and congratulations on a great quarter. frank slootman, president and ceo of servicenow. stay with cramer.

you know i like to tell you what's happening behind the scenes on wall street, peeling back the curtain so that, well, you know what's really going on, why certain stocks move the way they do. and right now we're hearing talk about what's known as a re-rating. re-rating some very big sectors, meaning institutional investors are pushing money into groups that have been stalled out or neglected for ages. they suddenly come alive because something has happened to make them more valuable than they

were just a couple quarters ago. take the banks. the banks make up a huge percentage of the s&p 500, but their performance has lagged behind the averages for ages and ages. that's because the banks have been stuck in interest rate and regulatory hell. the financials simply can't make that much money off your deposits because rates are so low. lately, though, investors have been pinning their hopes on a potential rate hike, which will let the banks generate higher profits pretty much risk-free. but this time right now, in the last couple of weeks, buyers are gobbling these bank stocks up not because of a rate hike but because of fees. yep, the focus is on fees, fees, and more fees. maybe enough fees to make people want to own financials for more than just the net interest margin. that has been the only thing anyone has cared about for three years. where are the banks making this money? when you see giant ipos like zto express, forget the fact that it didn't do well, we have to take notice of what it means for the banks. they're making money on that,

especially it sounds like a snapchat ipo might not be that far away, and that is going to coin money for the banks. initial public offerings are very lucrative business but there year there haven't been very many and it's hurt the equity sales trading. that seems to be changing this quarter. re-rating. meanwhile we've got mergers galore, another terrific business for the investment banks. when you see qualcomm's $47 billion purchase of nxp semiconductors, a transaction that's driven the acquirer's stock up dramatically, that's right, qualcomm, you can almost taste the big m&a fees especially since it comes on the heels of the at&t and time warner tieup. when you see the wild trading in currencies that we've experienced lately, coupled with all that bond activity, you got to start thinking maybe the brexit induced turmoil that produced such rich trading fees might not be one time only. and when you see the long growth that we're getting at both large banks like bank of america and

jpmorgan, you have to believe that their gross margins could finally be climbing just from lending alone. how big could the ripples be? i'll go out on a limb here and say if the federal reserve raises rates in december, get this, this is unbelievable. the most beleaguered company in the universe right now, you can fill in the blank, yes, talking wells fargo, might even see its stock go higher. now, that would be something. in the meantime, citigroup remains the cheapest of the banks on a book value. i think it can vault $15 from here befo here. look, it's not just the banks. we're seeing a similar re-rating of the oil service stocks. once crude got to 50, domestic drilling started picking up. the big dogs that provide assistance to the oil producers, what's known as the scoop in oklahoma, are seeing a real revival. that's how the stock of halliburton and baker hughes have been -- finally the airline stocks are back in business.

i say that because when southwest says that things are pretty down beat about the current environment and then many of the other stocks in the cohort are either hit with merely glancing blows or actually go higher on the same day of a southwest morning, well, that's just a plane of a different color. the much improved united continental remains my favorite in that sector. here's the bottom line. the banks, the oil service companies, and the airlines, air all groups that the market had given up on for at least the last year, maybe longer. and they're all inching back. i think all prime to explode higher if just a few more things go well because the fabled re-rating process has this quarterfin quarter finally begun. p.t. in california. p.t. >> caller: jim, how you doing. greetings from your second biggest fan in the world? >> thank you. what's happening? >> caller: not much. i ran into a 3-year-old on the street that had a "mad money"

binky. >> that's good news. >> caller: so, hey, i was listening to exchanges my goldman sachs, and they're rolling out a pretty cool retail bank online, deposits for as little as a dollar and some really attractive and aggressive personal lines of credit from 3 to like $33,000. i'm wondering with the trouble at wells fargo are these innovations at goldman sachs a good time to get bullish? >> i think you should be bullish because they're a core business of investment banks and trading are doing quite well. i liked the quarter very well. marcus which is the name of that online bank, it's not going to move the needle. what will move the needle are these big fees. i think goldman sachs is too cheap a stock. jay in indiana, jay. >> caller: hey, jim. thanks for your time. i have a two-part question, and it's about pharmaceuticals. bill miller earlier this week said he sees you're exdouble in

three years. what is your view on it? do you think they should sell a boush and loam if there's a potential buyer? >> i was going to say i don't know if there are any buyers out there for boush and laum. that means that asset may not be able to command as much money, which makes me worry about the balance sheet, and i am on the same side as bill miller in a lot of different things, particularly the airlines, but not when it comes to valiant. >> don't buy. don't buy. >> bruce in florida, bruce. >> caller: hi, jim. i was really kind of wondering if you can maybe answer this question for me. why is chevron trading so much higher than exxon mobil, conoco phillips and b.p.? >> that's a good question. i think we have to be careful because exxon is trading higher. these companies are due to report. chevron is regarded as being the most aggressive and frankly in

many ways the most scientific of all of the different oil companies. but exxon and chevron are up the same amount. if you ask me, i always like the chevron guys. i think they offer a lot -- bring a lot to the table. but my charitable trust owns occidental. better yield right now, a little bit bigger than these guys, and i think has more of an opportunity to bring out value. so i think if you want to be in the patch, go occidental. a little less yield than chevron. little more yield than exxon, but a lot more opportunity. anyway, banks, energy, and airlines, three areas of the market that could be ready for a sustained rally after being out in the cold. i prrtly like the oil service companies. 67 more ahead on "mad money." i'm talking with groupon's ceo after a very rough earnings report to see about the e-commerce. then with student loan daet at $1.3 trillion, i'm talking to

one private company that thinks it can help. and all your calls rapid fire in tonight's special edition of the lightning round. so stick with cramer.

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>> if you want to know what happens with a turnaround story stock hits a bump in the road, take a look at groupon. after spending a long time in the wilderness, groupon finally seemed to be executing a comeback and as of yesterday, its stock was up more than 70% year-to-date. then we got two pieces of news. groupon reported and announced it was acquiring its rival, living social, for an undisclosed sum. the stock got taken to the wood shed today. what was so bad about the quarter? actually frankly it's a little

hard to say. groupon's top line and bottom line numbers were both slightly better than expected. the company is growing its user base and rationalizing its global footprint. the living social deal will make it harder for them to turn a profit at least in the near term. i think the real reason the stock got hit today is it had run up dramatically going into the quarter. in other words, it was priced for perfection and what we got was merely good. she we view this as a potential buying opportunity or do we need to worry the turn around is running out of steam. let's check in with rich williams. mr. williams, welcome to "mad money." good to see you sir. >> thanks for having me. >> you heard what i just said. honestly i spent most of the day trying to figure out what everybody hates about it, and i decided there wasn't anything except for the fact it had gone up a lot, and people thought this is time to be able to ring the register. >> your guess is as good as mine on that one. i looked at it. it's been a little bit confusing. we had a strong performance, as you said, and the fundamentals

in the business are showing great progress. as we look at our execution against our strategy, we'd say we're on track. so, you know, i think maybe there was some fast money moving out and some perfection expected. >> right. >> but i think we delivered solid results. . >> look, i thought typical for the research, credit suisse did a good job. they said, in line third quarter, results, expect gradual progress on turn ja rouaround. i think people might have expected instant turn around. you have never promised that. >> i have not. i'm a practical guy. most people that set out on the magnitude of change that we set out end up having conversations about roads to recovery that are years long. when we set out, we said this wasn't going to be instant. it's not going to be simple. but in that path, we've also delivered now four quarters of really steady progress. you look at our north american local business, our core business, accelerating over the last three quarters. i'd say most people again -- and that's based on saying this is

going to take a while -- but you're going to see progress along the way. we've been clear about that. >> you made the acquisition of living social. >> yeah. >> you said i think pretty much when i asked you this, undisclosed sum. but to some, that was rather radical. i think the more radical thing was to be able to sell some things that you owned or shut things that you owned and that living social actually fits into your core mission. >> i agree with you. when i took over the job now a year ago, i basically said, look, we're going to do four things. we're going to simplify our lives. >> and you did have a lot of stuff that was hard to understand. >> we had a lot of stuff. one of those key strategic pillars was simplify and streamline the business. that meant removing some businesses that weren't core. >> okay. >> and when we did that, we also said we're going to continue to be tunistic on m&a, we believe we can do both. we believe we can be smart operators and also acquire companies as long as they pass a very high bar. that high bar was again simple. it said they have to be on

strategy. >> which living social certainly. >> it has to be down the middle with where our focus areas are and that's north american local. that passes that bar. >> what i'm saying is that the reason i mention that is i was looking at your cash position. you have $870 million, almost 40% of usual market cap. i have to believe that was dinged substantially by buying living soeshlg. >> it was a non-material acquisition. so, you know, we look at that in multiple ways, both the financial side and now with what we know about integrating businesses and operating this business well, we don't see it as a material distraction from our day to day operations. we very much look at this deal as can we acquire a significant number of customers at a cost of acquisition that we think is effective? >> this was a more internal investment acquisition. you made a decision that -- >> i mean we look at it just

like any customer acquisition, 12 to 18 month horizon, is it going to pay us back on a gross profit basis. in this case, we feel strongly that it will. >> you must feel that way about advertising on tv because i'm seeing those. >> we do. we do. we've been quiet in that world for years. and i think, you know, it was time to get back on the air. it was time to start educating people about how groupon has changed. we've seen great response to that. >> you have. tell me what you mean by that. >> we've seen that it can be an effective customer acquisition channel for us. when i say effective, i'm putting the brand stuff aside. i'm saying if we measure it and we -- do we see the roi we need to see. we measure it like efrl channel we operate it. we can acquire a good size number of characters at an roi that we think is really solid. we treat it like every channel we operate in, and it has that extra benefit of teaching people what's new at groupon. >> rich, you're a regular guy, and you're one guy trying to

turn around a big company. i wonder even if there were terrific -- and i know you're going to say there are -- international markets, would it be better just -- because the thing got so far flung. just say, okay, listen, i'm going to focus on domestics because the opportunity is pretty great domestically. >> i mean we went through every country that we operate in, and we put them through what i think is the right framework. we basically said do we have a strong competitive position in the market? does the market have characteristics that we like? does it have strong mobile penetration? is it a connected market. do we believe we have investment characteristics that make sense there? do we think we could win? where we didn't think we could win, we made the hard call, cut them out. we think we have a good winning formula. we believe they can support investment long term and be good solid businesses. >> one last question. it's really unnerving when i mention groupon, you know. i say i think they've bottomed. people said, jim, google could

wreck them in a day. >> yeah. >> they can put them out of business in a day. what do you do when you hear that? >> i hear that all the time. >> right? that's the rub. >> at least i hear that in the media side. i don't really hear that from customers. but i think the big thing you have there is context. and i think it's the challenge that you have with google. you know, we or anyone else that has a different kind of context, people go to google to find stuff. people go to groupon to buy locally. >> right. it's different. >> it's a different animal. now, we don't have their scale. we're acquiring scale as fast as we possibly can. but when people think of groupon, they think i'm going to go find a great restaurant. i'm going to go find a great spa. i'm going to do something with my kids this weekend. i'm going to save a ton of money. changing that, incredibly hard to do. >> we'll leave it at that. you answered a lot of my questions. i really appreciate it. that's groupon's ceo rich williams. i think the stock is really interesting b interesting down so badly today because there really wasn't

anything that should make it go down like that. "mad money" is back after the break.

>> announcer: lightning round is sponsored by td ameritrade. >> it is time! it is time for the lightning round! that's where i take your calls rapid fire. you tell me the stock.

i tell you to buy, buy, buy or sell, sell, sell. we'll play this sound -- [ buzzer ] -- and then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round on cramer's "mad money." let's start with scott in north dakota, scott. >> caller: hello, jim. >> yo, yo. >> caller: how you doing today? >> good. how about you? >> caller: good, good. thanks for taking my call and thanks for your show. i've learned a lot from you. >> thank you. >> caller: my stock is fire eye. i keep on buying it as it's going down, and it's really down there now. >> maybe at some point. i can't recommend the stock on a takeover basis because the fundamentals aren't that good. the one i've been liking is proofpoint because that does the e-mail blockage which is what you've got to worry about right now. craig in minnesota, craig. >> caller: big booyah from minnesota there, jim. >> all right. sorry we had to beat the vikings last weekend, but that's sometimes the way it is. what's going on? >> caller: well, i got shopper fly, ticker symbol shop. >> you know, it's up too much. it's up too much. it's up 60%. that makes me nervous.

i know it's doing well, but it is up too much, and i want to be a little cautious here. let's go to randy in new york, randy. >> caller: thanks for taking my call. >> of course. >> caller: i'm interested in impegy. buy sell or hold. >> we did a piece saying if it pulled back, we would be a buyer. it's pulled back. it's getting kind of interesting. how about alex in california, alex? >> caller: booyah, jim. >> booyah. >> caller: how about sign dozier? >> no. my charitable trust owns allergan. if you're going to be in that but allergan is going to come down a few more points as we get into the election. david in massachusetts, david. >> caller: jim, booyah. >> booyah. >> caller: i was wondering your thoughts on erii, it's been performing well the past year but -- >> yeah. you know, let me do more work on that because it's such a fascinating company. we got a lot of homework to do.

let me do work on that. george in florida, george. >> caller: hi. i was think -- what do you think about zoe's kitchen? >> zoe's kitchen did not do what i wanted, which is to say not as bad as i thought. i like the long term thesis, though. if you have the patience for a year, i think that zoe's is going to make you money because it's fresh food, and it's got a great concept. but it might take a year to recover because when these restaurant stocks go wrong, they stay down. vidula in california, vidula. >> caller: hi, jim. nice talking to you. >> same. >> caller: buy more or sell? >> we just hit the jackpot with nxp on my charitable trust. now i'm looking at nvidia. one more call. charlie in virginia, charlie. >> caller: thanks, jim. i'm a long time fan and a fellow b and b owner. >> really?

>> caller: in november 2014, you discussed ticker pay and discussed how every retailer would need a new credit card machine. >> but then i pulled it when it turned out they couldn't make any money in the 20s, i said this one was a bad one, and it remains a bad one. they just weren't allowed to make any money in this darn thing. what can i say? and that, ladies and gentlemen, is the conclusion of the lightning round! >> announcer: the lightning round is sponsored by td ameritrade. zed horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.

we are always on the lookout here on "mad money" for privately held companies that are upending their respective industries either with new practices or innovative practices. that's why we go off the tape and on the hunt because sooner or later they're going to impact the companies you can invest in. take earnest, the online lender that specializes in student loan refinancing and personal loans for everything from buying a home to paying for a wedding reception. with earnest, the whole process of borrowing money can be done online and they'll charge you lower interest rates that conventional banks. earnest has a hyperpersonalized underwriting process where they lend you money. they look at a lot more than just your credit score, and they're proprietary software helps them figure out whether or not you're a good credit risk.

the company has been around for three years and they just last month crossed the billion dollar loan mark. i think this is a great example of how the online lending space is dragging the financial sector kicking and screaming into the 21 century. let's sit down with the co-founder and ceo of earnest to here more about his company and what sets them apart from both traditional banks and the plethora of online lenders that have popped up in recent years. good to see you, sir. have a seat. >> hi, jim. >> thank you. we've had a couple of the online lenders on, and candidly they haven't done that well. i would say that either had trouble finding investors to buy their loans, or they were sloppy underwriters. how do we distinguish that from you? >> yeah. i think that the first part is what you were just talking about, sloppy underwriting. at earnest, what we're doing is the most thorough underwriting of anybody in the business, offline, online. the way we do that is we're actually looking at the full financial profile of all the individuals.

so we're looking at their bank accounts. we're looking at their past debts, but we're also diving into their asset accounts, and that's something that no one else is doing. and we're doing it by connecting directly to their online financial accounts. >> now, i would presume that a jpmorgan, wells fargo, could do this if they wanted to? >> yeah, i mean i think that when you talk about could have, would have, should have, lots of companies could try to do what other more innovative companies are doing, but i think ultimately we're totally vertically integrated. and we rethought from first principles how would you assess someone? so this happened to me. i was going to graduate school. it didn't really make any sense to me that you weren't looking at all my past job history, and you weren't looking at all of the savings i had right at that moment in time. and if you think about the traditional system, the traditional system kind of had built up this reliance on credit bureaus. >> right. >> and credit bureaus are just missing cash flow and -- >> you're talking about like a fico score. >> exactly. >> as far as you're concerned,

that's almost an abstraction. >> it's a subset. if you think about a balance sheet like, you know, the balance sheet of any consumer, you know, the credit score, the fico is just a summation of the lines on someone's credit bureau report, but it's got lagging data, and it's totally missing the other side of the balance sheet, which is the asset side. then it's totally missing the income statement. >> excellent. people who have used you, how much money have they saved? >> so the average borrower saves just under $22,000. so for the billion dollars of loans that we've done just over, it's $300 million in aggregate that we've save the our clients. >> and how much money is earnest able to make? some banks would say, look, they must be not -- they're taking a risk by not making enough. we have to make up enough so that we don't -- if we lose, we're still okay. >> yeah. i mean so we charge very low interest rate. overall, our interest rates are about 5%. >> mm-hmm. >> but what we're doing is we're

really good at, one, reducing our costs using software and ought make as well as really assessing the risk. so, you know, over the whole life of the business for a billion dollars of our student loan refinancing, we've never had a loan default outside of the result of one of our borrowers passing away? >> never? >> mm-hmm. >> never? >> none of our student loans. >> that's extraordinary. wow. about wells fargo, is that an opportunity for you? do you think people say, you know what, if the so-called greatest banks in the world are doing this stuff, i am willing to venture out and go to a bank that is new that i trust more than the old? >> yeah. i mean i think financial services in the whole history of financial services is built on trust. but i think -- and even in many ways, financial services has been built on innovation. but i think when you look at some of the larger incumbents like this wells fargo example,

this kind of chase for revenue and chase for earnings, they have seemed to have lost their way. this is i think just another example. but, you know, when we started this company three years ago, we knew there was a huge opportunity to really start over from scratch and build something better. >> last question. i find it intriguing. you keep the loan. >> yeah. >> so if i get in trouble, i actually can talk to someone? >> exactly. we originate all the loans on our balance sheet, and we do use the securitization market to finance our balance sheet. but then we do all of the loan servicing for the life of the loan. so that's something that's also unique. like i said, we're totally vertically integrated. we have a mobile app. we have a web dashboard, and we've innovated a lot of features. one of the features on the servicing side is a skip a pay feature. if you're in good standing and you'd like to take a month off, you can just skip a pay. what's really interesting, goldman sachs just launched the new marcus, and that's one of the features of ours that they've emulated.

>> excellent. anyway, i think it's very creative and a great solution for a lot of people. thank you so much for coming on. that's lieu as byrl co-founder and ceo of earnest. thank you. >> thank you. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom?

what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

doing the work on amazon, yes, they did not give you what you wanted but the stock had run up big. remember what i've been saying about this quarter. if a stock has run up big into earnings, it tends to sell off, particularly if you say anything that's a little bit at all down beat. and i will say that amazon was like that. don't freak out if you own amazon. just be patient. a couple days maybe. if you don't own amazon, maybe you've picked some up. alphabet, what can i say? it's good right now. i like to say there's always a bull market somewhere. i promise to try and find it just for you right here on "mad money." i'm jim cramer, and i will see you tomorrow!

>> george: taking an invention from concept to reality takes hard work. >> i think we've gotta take a bunch of weight out of it. >> deanne: and a willingness to do it over and over again. >> i've been at this over 16 years. >> george: but 98% of inventions never make it to market. >> all i see is problems, problems, problems, problems. >> deanne: to beat those odds, inventors need help. >> i've been ready to take this to a totally different level, i just need help. >> that's where we come in. curtis. >> oh, my gosh. >> hi. >> hey. >> i'm deanne bell, a mechanical engineer and mentor for inventors. >> i'm george zaidan, an m.i.t.-trained chemist and advisor to startups. >> deanne: and together, with our design and engineering team, we take inventions to the next level. >> how cool is that?