NYSE Euronext (NYX) has been a debacle for Mad Money viewers ever since Jim Cramer named it his growth stock of the year for 2007 on January 4th in front of second place Apple (AAPL) and third place Cisco Systems (CSCO).
The closing price was 95 on the day that Jim proclaimed it the growth stock of the year. The stock then climbed to an intraday high of 112 just four days later and hasn't recovered since, now sitting near the mid-seventies, a full 20% or more loss for loyal Cramericans who bought after the "stock of the year" recommendation.
Back on March 17, 2006, Cramer was calling NYSE Euronext (NYX) (before the Euronext acquisition) overvalued on an earnings basis. Just a month later, Jim changed his mind giving the stock one thumb up on merits of being in the same company of such high flying exchanges as CBOT Holdings (BOT). A month after, in May 2006, he told viewers "Don't Buy, tough judgement." In August 2006, he gave the stock a passionate "Sell, sell, sell, they're going to overpay for that Euro thing [Euronext]." Just a month later in September, Jim told viewers of Mad Money that he was going positive on NYX: "I thought NYX was going to spend too much on Euronext. Now I think NYX should buy more exchanges around the globe"..."How about a 25x multiple on those $4? You've got a $100 stock. If they can deliver just 15% growth over the next couple of years, they deserve that multiple, and this stock could go to $100!" Well the stock did eventually make it to $100 and beyond, but was hype primarily to blame?
On December 9, 2006, Cramer gave an even more extravagant price target for NYX, "What would you do if I told you I'd found an $87 stock that I think goes to $250 a share in a couple of years?" and gave several reasons that the stock would reach the price target. Reason 1: New computer systems will speed up trading. Reason 2: The New York Stock Exchange probably won't overpay for Euronext. Reason 3: Management at The New York Stock Exchange is finally getting it together. Reason 4: The Euronext deal will bring unexpected savings to The New York Stock Exchange. Reason 5: NYX is going to be a global exchange. Reason 6: New computer systems will prove to be more cost-efficient.
Finally, Cramer christened NYSE Euronext (NYX) as the growth stock of the year and announced a price target of 240. "The New York Stock Exchange is my growth stock of the year for 2007 because it should make you more money than any other growth stock I follow."
Since then, NYSE Euronext (NYX) has traveled nearly straight downhill, no doubt contributing to Cramer's daily "existential crisis" as he likes to say of his life on the Mad Money show. While holding NYX for his charitable trust, Cramer continues to defend NYX saying that he's "sticking by it" when no one else will. He has called it the most hated stock on wall street and even brought Duncan Niederauer onto the show, NYX's Co-President and Co-COO, apparently to ask him why his stock wasn't going up. Shown below is the complete history of Jim Cramer's NYSE Euronext (NYX) track record on Mad Money since the inception of this database.

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4 comments:
The only difference between Wall Street and Las Vegas is the entertainment.
Good analysis ... at the time we discussed the "Cramer Effect" that had caused NYX to jump over 7% as soon as Cramer made it his #1 growth stock (the interview can still be read at the bottom of our "What's New" link on InstantBull.com) To be fair on Cramer, his #2 pick (AAPL) has been up ~50% since Jan, but then again most people didn't need Cramer to predict that Apple would take off with the iPhone craze.
So, what is your thought on the stock? Do you believe that NYX should be trading in the $70s, or do you have a higher valuation for it? Cramer has definitely stuck his foot in his mouth on this one.
Cramer definitely missed on this call because the valuation was a little high for the exchanges mainly because most of them were buyout targets but NYX is definitely the hunter not the pray but your analysis is great. I'm going to link your blog. Equities exchanges are overrated but I think eventually there will be just 4-5 huge global exchanges not tons of little ones all over the world. The Stock Pitcher
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