CNBC’s Jim Cramer rarely fails to notice new players arriving on the data center scene, which is why Switch’s initial public offering, the second-largest tech IPO of 2017, caught his attention.
“After digging into this story, I think the pros do outweigh the cons, although I’m obviously not alone in believing that, as the stock surged from $17, where it came public [Friday], up to $20.84. That’s a 22 percent gain right out of the gate,” the “Mad Money” host said. “Which begs the question: is Switch worth owning even after today’s monster move?”
With a book of high-profile clients including Amazon and eBay already under its belt, Switch claims to offer an advanced kind of data center replete with patented cooling systems and powerful machines equipped to handle businesses’ sensitive, complex and regulated data.
Moreover, 95 percent of Switch’s revenue, which grew by 17 percent in the first half of 2017, is recurring, meaning the company offers its data centers as a service. That creates a steady revenue stream and contributes to Switch’s already-profitable business.
“The fact is this is a pretty lucrative business. I told you I love the data center,” Cramer said. “However, while Switch is intriguing, it also has some issues that we’ve got to address here.”