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Cramer says selling not done for tech stocks trading at high multiples to sales: ‘Those have had it’

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Jim Cramer

Scott Mlyn | CNBC

It’s been a bloody few weeks for once high-flying tech stocks and CNBC’s Jim Cramer believes there is still a bit more carnage to go for some parts of the market.

“Tomorrow you got to do some selling…if you own stocks that are selling at a multiple to sales…those have had it,” the “Mad Money” host said on a CNBC Special Report on Monday evening, following a volatile session for stocks.

Cramer is referring specifically to the stocks trading at high price-to-sales valuations that have little or no current profits that were being bid up during the pandemic for their future earnings potential. These names are now faltering in the face of a Federal Reserve pivot that could lead to higher rates. Cramer says you have to separate those stocks from the companies that actually make products and sell services that are generating profits today.

The major averages whipsawed on Monday, earning back steep losses to ultimately close in the green. However, its been a sea of red for stocks this month, specifically the technology-focused Nasdaq Composite, which is in correction territory.

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At one point on Monday, the index was just a few percentage points away from reaching a bear market.

Cramer used Lemonade and Cloudflare as example of stocks he finds challenging to value.

He said only when a major software company steps into buy one of these faltering high multiple tech shares would the bottom be in for these kind of names.

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This article was originally published on CNBC