Jim Cramer: Toast is a good company, but its stock is too expensive right now to buy

CNBC’s Jim Cramer advised investors to hold off on buying shares of Toast after the restaurant technology company’s public markets debut Wednesday.

The “Mad Money” host said he believes Toast is a “great company,” noting he understands the importance of its tech offerings such as point-of-sale hardware because he’s a restaurant owner himself.

However, “I can’t recommend the stock up here, not with this valuation and it’s kind of somewhat minor moat,” Cramer said, pointing to competition from the likes of Square and Lightspeed.

“Not only do Toast’s customers lack loyalty, they often can’t even afford to pay their bills. That is not the best clientele,” he added, referring to the financial struggles many restaurants have experienced during the Covid crisis.

“Again, that’s no knock on Toast. .. It’s just that this thing has been bid up to ludicrous levels. ... At a much lower price, I’d be telling you to buy it hand over fist,” Cramer said.

Shares of Toast closed at $62.51 on Wednesday, putting the company’s market cap to over $31 billion. Toast sold shares at $40 each in its IPO, above its expected range, to raise $870 million.

“Here’s the bottom line: I like Toast the company, but don’t chase Toast the stock,” Cramer said. “There’s too much risk, too much competition, not enough earnings and most of all, take it from me, they’re dealing with the worst set of clients in the world: struggling restaurateurs.”

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[Waitaminutesilly]

LSPD is too expensive? Tell me which growth stock isn't expensive out there??

[pololedodo]

Buy Lightspeed. You wont regret it. 1000% return before 2025.

[GothicTeaVea]

My anecdotal experience only goes back to 2017.
My golden rule of thumb is I usually wait for an IPO to drop 30% within the first quarter of it entering the market.
I usually do pretty well with the strategy and it hasn't really not worked for me.
It just feels like I'm making dumb money.

[Maria-wcnn]

This dude is literally the definition of financial literacy he's not just giving you stock picks like other YouTubers he actually teaches you how to read the market and such. Good luck to everyone watching this, May your investment yield you outstanding profits.

[laho]

The CCP began to nationalize private Chinese companies invested in Europe and the United States step by step, meaning that Qian Tongtong invested in foreign countries was returned to the CCP state. Hong Kong real estate has also begun to move back to state-owned enterprises. In the future, foreign companies investing in China will face suppressing government orders to seize foreign investment assets.

[虎哥论股]

You know how much Jim Cramer hate the Toast as he spent 3 min to grill TOST, because his own restaurant adapted free LSPD system I assume. LSPD sported higher ps because of higher growth, come on, this higher growth is mostly by M&A

[agaragar]

Wrong AGAIN this guy ever get Tired of getting it time to buy on the Greg Mannarino !