Mad Money

Cramer warns of trading after hours, points to big recent moves in Micron, Lululemon and RH as examples

Key Points
  • CNBC's Jim Cramer reminded investors to always listen to a company's conference call before trading on earnings and to avoid after-hours trades.
  • "One mistake in after-hours trading will wipe you out much faster than a mistake during regular hours when everyone has the same information. There are more bids and offers, and the playing field is more-or-less even," the "Mad Money" host said.

In this article

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Cramer warns of trading after hours, points to big recent moves in Micron, Lululemon and RH as examples

CNBC's Jim Cramer reminded investors to always listen to a company's conference call before trading on earnings and to avoid after-hours trades.

"One mistake in after-hours trading will wipe you out much faster than a mistake during regular hours when everyone has the same information. There are more bids and offers, and the playing field is more-or-less even," the "Mad Money" host said.

Cramer also listed three examples of companies that reported earnings on Tuesday, leading investors to make after-hours trading decisions with regrettable outcomes.

Here are the three cases Cramer outlined:

Micron

Micron reported better-than-expected earnings and revenue and delivered a rosy outlook in its latest quarterly results. While the stock jumped more than 4% in after-hours trading on Tuesday, it was down 3.52% on Wednesday. 

The catalyst of the drop could have been the company's comments on the conference call regarding how Covid outbreaks in China impacted production output and how Russia's invasion of Ukraine could hinder Micron's supply chain, according to Cramer.

"The Micron quarter was not bad. … But if you tried to chase this stock in after-hours trading at $86, you ended up paying much more than you needed to," he said.

Lululemon

The athleticwear apparel company reported better-than-expected earnings but fell short on revenue in its latest quarter. Lululemon also announced a $1 billion stock buyback program. The stock climbed around 7% in after-hours trading on Tuesday but also experienced a "flash crash," Cramer said.

He believes the culprit was confusion around estimates for Lululemon's total comparable sales and its comparable-store sales, as well as the company's comments on the conference call that ocean freight delays are causing more dependence on air freight.

Lululemon stock was up 9.58% on Wednesday.

"If you sold the stock down at $345 last night, you're kicking yourself today," Cramer said.

RH (formerly Restoration Hardware) 

RH reported an earnings beat and announced a three-for-one stock split for the spring but missed on revenue. Cramer said CEO Gary Friedman's comments about how soaring inflation and Russia's invasion of Ukraine are slowing the business spooked shareholders.

RH stock was down 13.33% on Wednesday.

"As much as I like stock splits, none of this stuff matters if the underlying business is struggling," Cramer said.

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