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Look, I'm still reeling from whatever the heck hit us this week. It was the thrill of victory and the agony of defeat. Well, it's actually more like the stench of defeat, if you want to know the truth. If you had too much of the two new curse words that are data and center.
I for one can't wait for the weekend because I really need to process off the desk what the heck happened here this week. I told CNBC Investing Club members at our annual meeting today that we are not done with the volatility, which happens to be Wall Street gibberish for stocks going down.
And by the way, I just have a total honor to be surrounded by some VIP club members here for this show. Today's session, the Dow fell another 237 points, the S&P gained 0.31%. NASDAQ tacked on 1.09%.
Really didn't change anything for me. I didn't hear anything positive about the data center that would make me feel the public rebuke on Tuesday doesn't still sting. I didn't feel that any numbers in tech were too low. I felt like it was a dead cat bounce. Now I know we are never going to get an all clear. No bell ever goes off,
but it still feels like there are plenty of sellers lurking, just waiting for the bedraggled data center stocks to make a bigger recovery so they can get out. Sell, sell. The non-farm payroll report this morning was very strong, which leaves no doubt the economy is humming, but it didn't mean much to bonds or the stock market. I'm glad personally that it's out of the way. The fewer variables, the better. But let's take a look at our game plan to see if there's anything ahead that can make us more positive about the nasty decline that I don't think has yet to run its course.
On Monday morning, we hear from a company called Constellation Energy. That's an independent power producer with a big nuclear fleet. The big hyperscalers, the Microsoft, the Amazon, they love that Constellation can offer emissions-free power. We want to listen to what they have to say about the election and wonder if Tuesday's results mean they'll slow down plans to build new power stations. If they say that, the data center stocks could see a fresh wave of selling.
Tuesday, On Holding reports, and there are plenty of people thinking that athletic footwear and apparel company's ready to bounce back. Wait a second. Look, anything's possible, and the stock has come down to a market multiple, but really my problem is the whole category, starting with Nike, just feels real crowded. I'm going to take a pass on this one.
We also get the October CPI report Tuesday, and we need to see some cooling here as inflation must come down if we don't want more rate hikes from Fed Chair Powell. I like the way rates have retreated recently, but I think it reflects the potential for lower oil prices from a war that might wind down and not a lower CPI. We need a surprise number, one that's dramatically lower than expected, although I don't think that's likely.
After the close, one of the most important companies in the world reports, and that company is a company you probably never even heard of: CoreWeave. This is one of those neo-cloud companies that are building data centers and borrowing a lot of money to do so. The cost of their debt is now sky-high, too high. Can they explain how they can pay it off? Can they tell us what their game plan is going forward if they can't issue any more debt because it's just gotten too darn expensive? Can they give us a reason not to worry about the mid-teens interest rates for their public bonds? Michael Intrator, the often very sure of himself CEO, has to have something up his sleeve besides his arm for this one to go higher than the 6% rally his stock experienced today. I should have said relief rally.
Wednesday, quiet day actually, other than the earnings report from a company called Corteva, which is now a crop protection pure play after a breakup that was completed last month. Now I don't know if you remember, but we liked a company called Vylure, which was the spin-out seed and genetics business, much more. Maybe Corteva can benefit from the new focus. Stock's cheap.
Oh boy, here we go. One of the toughest ones. You know, I gave you, I ran and I talked about CoreWeave, but welcome to Nebius. Yes, this one reports Thursday morning. This will be the third of the three big neoclouds to report, and the other two, CoreWeave and Nebius, are very important, but this one might be the most important. I got to tell you, I'm not even sure what I want to hear from this company anymore. I mean, I want to hear a lot. I want to hear robust new orders. I want to hear finished data centers. I want to hear sites laid out two or even three years, even international business. That'd be a godsend. But what I don't want to hear is that the sites they are building are coming in late and over budget or could be blocked by politicians fulfilling new mandates from the election. I don't think they'll talk about that, but I think the analysts will ask about it.
Cisco reports Thursday. I have to tell you that this company reported back in May, the stock galloped from $102 to $130 in a matter of weeks thanks to great AI orders. But you live by the sword, you die by the sword. The stock has been caught up in the incredible tsunami of AI selling and it's falling all the way back to the 90s. Now, I think Cisco has gotten oversold. I think Chuck Robbins is going to deliver. I think his stock's actually cheap. I think it might be worth buying some if we can get through the CoreWeave gauntlet.
I'd not be a big buyer, but a small buyer. Or how about Applied Materials? A stock that ran to just under $740 this summer during the great short squeeze caused by the aggressive buy by the Situational Awareness hedge fund right before the manager blew up. Now it's down to $332. Now look, normally I would think that it has to be a buy, right? Because it's gotten so low, but perhaps it should never have been up so high to begin with. Remember on Mad Money, we do not care where our stock comes from. We just care about where it is going to. So you can't say, 'Ah, it's been cut in half. Let's buy.' Not if the earnings aren't stellar and not if it should never have been where it was.
Kraft Heinz has an investor day this Thursday, and I bet CEO Steve Cahillane has something going to propel the stock to the next level. We like how much money he made for us in Kellogg, didn't we? Can he repeat? I think he can. He already just sold a majority stake in Kraft's coffee houses, which includes Maxwell House, for nearly $500 million to help pay down the debt. They got way too much debt. I think this man is a money maker. I think he has a plan to bring out value.
Finally, on Friday, we have the PPI reading. Again, we are just looking for any sign that there is a waning of inflation. Never forget that while rates are indeed lower, the move is slight and people are still expecting more rate increases if we don't get oil down, and if we still have lots of things in the pipeline like rent that's going higher. We know food is way too high. We don't want to give the Fed chief any ammo to stay tight.
So, the bottom line, you know what? It was a brutal week, one that tried men's and women's souls as we were exuberant about the election and then despondent by the consequences to the greatest story ever told, the data center.
Can the fire be reignited? We'll know real soon. But I wouldn't get my hopes up. All I heard today were bulls coming on TV telling us not to worry.
False confidence. I saw nothing to hang my hat on, let alone any of my trust money. Now, let's take some calls from some of our audience members. Yes, we have an audience. Let's go to Nick from Texas. Nick,
I like that code. I got to get one of those myself.
I watch you every day on Post 9 Mad Money.
Appreciate you being here. Thank you.
With beef prices high and cattle still low, the stock's up over 10% in the last month. Is it time to get back into Texas Roadhouse?
You know, I often think about it because I like Texas Roadhouse. We've had the management a bunch of times. The reason why I backed away from it, we had it, it's just it's too crazy. It is so much related to beef and not much related to their great service and how terrific the meals are that I said, you know what? I got to find something else. And that's why I went to Starbucks, which has been a big winner. But thank you very much for the question.
All right, now we're gonna go to Brian in South Carolina. Brian,
Good to be here. Thank you.
Longtime fan. Read your books.
Thank you very much. Thank you. I mean, a long weekend. It makes the week better.
Jim, with the emergence of SpaceX and all the new technology out there, what is your take on AT&T as a current and forward investment?
I have to tell you, I have Starlink in Europe and I replaced the system for $150 with a $50 much better, much faster system. I think that Elon Musk is a vicious competitor. I think AT&T represents old and he represents new. So, I am going to say you should not own AT&T. Tough call, but I say that. All right. Now, we're going to go to John in Texas. John,
I didn't want to say that. Dang.
Oh, well, you just did it for posterity.
I start my day listening to you on Squawk and I end my day listening to you on Mad Money.
Well, you got to be sick of me. My wife doesn't watch either show.
My question is about Broadcom. You recently took it out of the portfolio.
It's a pretty good company. Hit an almost 52-week low again today. Is it a good time to get into it?
Well, you see, I think I'm trying to cut where I can exposure to the data center, particularly where I had very big gains like Broadcom. I wish I didn't have to do it. I think Broadcom is great. If you want to have a position in Broadcom, that is fine. But you cannot be what we call overweight these companies that are involved with the data center because we could have another downdraft that fancy Wall Street jargon for stocks will go down and I'm afraid you lose money. But Broadcom's a great company. Please do not make this... this is one of the toughest moments when it comes to the trust. I'm selling a stock of a company I really like, but I can't have that much data center. And I thank you and booyah and thank you for watching me all that time. I really appreciate it.
All right, on Mad Money tonight, viewers keep asking why I haven't pulled the trigger on SpaceX yet. Tonight, I'm giving you my analysis of the company and telling you where I come down. And what the heck is going on with Papa John's? I'm sitting down with the CEO of the pizza chain after what I have to admit was a bit of a disappointing quarter. And as the market digests the blue wave, what sectors stand to benefit going forward? Don't miss my analysis and stay with Cramer.
Don't miss a second of Mad Money. Follow Jim Cramer on X. Have a question? Tweet Cramer #madmentions. Send Jim an email to
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With all of the madness of the past few weeks, I haven't had the chance to sink my teeth into one big story that I've just been itching to cover because I know it's one that many of you are interested in, and that is the stock of SpaceX. Now, if you're a CNBC Investing Club member or a Mad Money viewer, you've probably heard me say by now that I want to own shares of SpaceX. I've been tempted by the stock for a while now, and the company's third quarter earnings report last month only made me more interested.
Fine. But investing club members also know that I haven't yet bought this one for the charitable trust. Okay, we've debated behind the scenes, had some pretty spirited discussions. In fact, we haven't pulled the trigger yet. Maybe because I think we're a little gun-shy.
Tonight with our Investing Club members in the audience, thank you everybody. I thought it might be a good opportunity to explain my thinking. The bull case for SpaceX was on full display when the company reported third quarter earnings just over two weeks ago. It's tough to remember now, though it's happened. It's been crazy how hard it's been. But this report was at least initially a huge positive catalyst for SpaceX shares, which jumped nearly 8% the next day.
It's easy to see why. SpaceX's revenue surged to $14.6 billion. That's up 161% year-over-year and nearly $2 billion above expectations. The company's revenue growth has accelerated from 15% in the first quarter to 92% in the second quarter to 161% in the third quarter.
Earnings have exploded, too. SpaceX's adjusted earnings before interest, taxes, depreciation, amortization, or EBITDA was up 306% year-over-year to $8.8 billion. The street was just expecting $6.4 billion. And SpaceX reported a GAAP profit for the first time as a public company, earning 35 cents per share, nearly triple the consensus estimate of 13 cents. That GAAP profit is important because sustained GAAP profitability is a requirement for admission to the S&P 500 index. We know how good that is for a company.
As if those third quarter numbers weren't enough, the company offered very bullish guidance. SpaceX expects to exit this year with $100 billion in annual recurring revenue, and it guided for 33 to 37 billion of revenue in the first quarter of next year. Now that was well above Wall Street's estimate of just over $22 billion at the time of the report.
Each of SpaceX's three segments — space, connectivity, and then the newly renamed super intelligence, which is the AI business — outperformed with better than expected results for both sales and adjusted EBITDA. Now the space segment, which houses SpaceX's original launch for hire business, it's a small segment now, saw revenue jump 84% just from the second quarter, and it reported a surprise EBIT profit in the period. But the success of the space segment hinges on the development of SpaceX's Starship program. Those are its massive new rockets that can haul substantially more cargo to space.
SpaceX's 15th test flight is scheduled for next week, and they will attempt to catch both the booster and the ship after that launch. Oh, that's a key functionality that will enable much more frequent Starship launches in the future. Now, on the earnings call, CEO Elon Musk said that he expects, I'm going to quote it, 'Starship to fly weekly at some point in the first half of next year,' end quote, and then twice weekly or more by the end of next year. That would be something.
Next, the Starlink satellite internet segment grew really nicely. Revenue was up 69% year-over-year and EBITDA was up 82% in the third quarter. That's amazing. Both easily beat expectations. And SpaceX reported lots of success with enterprise customers in the quarter. Though I should note that a small miss for individual Starlink subscribers was basically the only blemish for the SpaceX quarter. Wall Street wanted 14.23 million subscribers. We got 13.6 million.
But the more significant recent news for Starlink has been a series of headlines over the past month which show SpaceX plans to move aggressively into the wireless market, our wireless market. The company announced the acquisition of a spectrum lease portfolio for $8 billion in October. And there have been reports that it might lease cell towers from Crown Castle or even acquire the low-cost carrier Boost Mobile, which is owned by EchoStar.
The point is that SpaceX clearly wants Starlink to be competitive. It wants it to be the fourth national wireless carrier. It wants to be more than just a satellite internet provider for rural areas. And if they are successful in these efforts, then the total addressable market for Starlink should be much larger than it is currently thought to be.
Finally, let's talk about super intelligence. If there's one thing that I want you to take away from this SpaceX update tonight, it's that the company right now is primarily a hyperscaler. SpaceX's main business at this point is renting out computing power. That's what it makes its money on. When I covered SpaceX's IPO this summer, the AI segment was only 17% of revenue based on the first quarter numbers. By the second quarter, it was 33%. And in the third quarter, the AI business was 52% of revenue and 56% of EBITDA.
At $7.6 billion, the AI segment's revenue was up over 800% year-over-year, nearly 200% just sequentially. This comes as the company's deals to rent computing power to Google and Anthropic, which were announced in the weeks before the June IPO, have now finally kicked in. Google is paying $920 million per month for access to SpaceX's Nvidia GPUs. Anthropic originally agreed to pay $1.25 billion per month to rent SpaceX compute last spring, but in its recent IPO prospectus, we learned that that number is rising. It's going to reach $3.1 billion per month by December. With this massive deal, Anthropic passed the US government as SpaceX's largest customer in the third quarter. Incredible.
SpaceX is able to deliver on these gigantically lucrative contracts because it's quickly growing its compute power. The company's nameplate compute, meaning the amount of computing power they own and operate, has grown from 1.0 gigawatt at the end of March to 1.44 gigawatts by the end of June to 1.7 gigawatts by the end of September. But here's what's really exciting.
Elon Musk said on the company's earnings call that this number should grow substantially over the next five quarters. He said they're bringing roughly 200,000 Nvidia GB300 racks online per month as we end 2026. Those are expensive, and that pace should continue in 2027. All told, Musk said he expects SpaceX to have three gigawatts of compute online by the end of the year, and he expects to reach 13 gigawatts by the end of next year. All right, that's a huge amount of gigawatts. I hope he can pull it off.
Now, we've seen how quickly SpaceX's AI segment revenue has ramped with even the more modest compute additions over the past few quarters. CFO Brett Johnson said, quote, 'There are many customers asking for compute,' and that, quote, 'what we're seeing in the market is extraordinary,' end quote. With spot pricing tracking above the high end of the 30 to 50 per watt range that SpaceX repeatedly told investors, Johnson said that at average current pricing, new compute deployments are generating a payback period of less than a year.
Musk said later in the call, quote, 'It's not impossible that we will have a six-month payback period for compute next year.' That is just amazing. It's extraordinary. And if SpaceX can add compute at the rate that it says it can, then maybe Elon Musk's assertion that SpaceX should exit 2027 with between $500 billion and $1 trillion of annual recurring revenue, up from $100 billion at the end of 2026, it's not as crazy as it sounds.
That brings me to the last point for the SpaceX bull case, which is that if you believe the estimates, then this stock is actually very cheap, trading at over 16 times the consensus 2028 EPS estimate of $8 and change. The bottom line, there's an incredibly compelling bull case for SpaceX, and you can see why I've been itching to own this stock for the trust. But with so much going for it, why haven't I taken the plunge? Why haven't I bought the stock yet? After the break, I'll explain what's keeping me on the sidelines. Mad Money's back after the break.
Coming up, Cramer's putting SpaceX under the microscope to see why not to buy the stock yet. Next.
Before the break, I told you about all the positive aspects of the SpaceX story, which do practically have me salivating, itching to buy it for the charitable trust, hold it for the foreseeable future. But I haven't bought it yet. So, let's get into why I've held off.
Okay, first there's the issue of cost. Almost immediately after SpaceX's last report, investors began to balk at the potential cost of SpaceX's growth plans, just as we've seen with other hyperscalers like Meta, Alphabet, Amazon. In recent weeks, I told you that SpaceX's revenue guidance was far higher than expected. You know what I didn't tell you? I didn't tell you that the company also guided for 35 to $40 billion in capex in the fourth quarter, nearly double the expected $20.1 billion.
Looking out further, let's take Musk at his word that SpaceX will add 10 gigawatts of compute next year. Well, Jensen Huang says the cost of a gigawatt all in is about $50 billion these days. So, you can do the math on this, and that doesn't even include what the company needs to spend for its space and connectivity segments, which are not exactly capital-light businesses.
And the week after SpaceX reported, the company entered into a $40 billion debt financing deal with private equity firm Apollo. The proceeds will be used to buy Nvidia GPUs. And let's just say that the company will need to do several more of those deals, or it will need to sell additional shares, and that's a concern for us.
Second, there's the potential of a mega merger between SpaceX and Tesla. Now, I talked about the stunning third quarter results from SpaceX before the break, but those numbers were almost a side plot after the company's report. The big story from the third quarter earnings call was that Musk announced both companies had formed special committees to discuss the idea of a merger. Now, I've long thought that that merger would happen here. But a merger between the $1.8 trillion SpaceX and the $1.4 trillion Tesla, almost certainly by the way in an all-stock deal, would still be extremely complicated and introduce a lot of noise to the story that I'm not sure I want to ride out.
These deal stocks have not been working. Also, a deal for Tesla would likely undercut the valuation argument I already made for SpaceX. While the latter trades for more than 16 times 2028 earnings per share, Tesla trades for around 125 times its 2028 estimate.
Next is what I'm going to call political risk. Okay. In the week before SpaceX's earnings report, the biggest story for the company involved questions about whether it was Musk or President Trump that ordered the slowdown of the company's Star Shield service. Basically, Starlink for governments and militaries in Ukraine. Full service has been restored, but the episode highlights how hot-button this business can be.
And of course, that was before this week's election results. Now we have to worry about what the blue wave in Congress and Texas means for SpaceX. Who knows where this goes from here? Will
Must be dragged before Congress? Will that impact the stock? Can the company move forward with its aggressive growth plans for both data centers and launch sites in Texas? Now, all open questions. You know what though? With all the positives that I mentioned for the break and the scale of the opportunity here, I could honestly get over a lot of the things I've just mentioned. But the real reason that I've held off buying SpaceX to date is the fact that there is still so much supply of SpaceX shares that haven't even begun to trade yet.
I think that supply short-term could overwhelm demand. I've talked about this from time to time since I started covering SpaceX last spring. One of the reasons I thought you could be patient with the stock was the fact that SpaceX's float, or the percent of the company's shares that trade freely, was less than 5% of the IPO. The company had a complex staggered lockup release schedule, and we've now passed several points where more shares could begin to trade. I don't know if the stock's ready for that, but by my math only about a third of the company's shares outstanding are free to trade currently, a lot more behind it. The rest of the shares will become free to trade gradually over the next 8 months or so.
The final lockup release from Musk and some other core insiders comes after the company's second quarter 2027 earnings report, which would likely be in July of 2027. And with each additional release, that means more supply of SpaceX shares against the same amount of demand for the stock. At the end of the day, I simply think that I'll be able to get a better price for SpaceX as all that supply hits the market. And you know, I like to get the best price. So that's why I've kept the bat on my shoulder so far when it comes to buying SpaceX. And I'll note that's been the right call after a nice bounce today. Admittedly, the stock is still down less than a dollar from its IPO price, but it's also down almost 30% from its first day close of $161. If I bought the stock after its post-third-quarter rally on October 21st, I'd be down almost 16% in just two and a half weeks.
Now you could say if I am thinking of this as a 10, 20, or 30 year holding, who the heck cares if I buy it at $150 versus $130 versus $100? And I am sympathetic to that argument. I really am. But I also know that if I bought it for the trust at $159 after that last quarter and I have to come out here today and explain to club members why I just gave them a quick 16% loss, and with so much supply still to come, I don't know. I just want to put people in front of — I'm not putting people in front of a freight train. Put it that way.
But you know what we can do in the interim? We can follow SpaceX's progress. We've made this tracker which we plan to refer back to often. It lists either specific guidance that's been given by Musk directly or just expectations for the company that are currently embedded in the stock. As I wait for a good opportunity to get into SpaceX, and I'm waiting, I can check this regularly to make sure the story remains as good as it seems right now, as club members can do. For the space segment that starts next week with a successful Starship 15 test flight, I'm really eager to see if the company can meet the goal of weekly flights in the first half of next year and then twice weekly flights in late 2027. For the connectivity segment, the Starlink business, Musk hasn't made as many specific promises. But given the miss last quarter, I want to be sure that Starlink subscribers are trending as expected. I'd also like to see these rumors of a big push into wireless translate into an actual service that people want to use. For the AI business, it's simple. Can they get to 3 gigawatts by the end of the year? Can they really add another 10 next year? And overall, is the mostly ambitious goal of $500 billion to $1 trillion of annual recurring revenue legitimate?
These are the things that I'll be watching for as I wait for the right time to buy the stock. I'll do my best to update you regularly on the company's progress against these goals and targets. But the bottom line overall is that as good as the SpaceX story seems to be, I'm not ready yet to take the plunge and buy the stock. The company's projected costs are astronomical. A merger with Tesla could complicate the story, and the political risk increased significantly this week. Most of all, we're going to see a steady supply of new shares over the next several months at a time when there's so much supply of stock and bonds already. So, I'll watch, I'll wait, and I'll monitor the company's progress. And if and when I'm ready to buy SpaceX, well, guess what? You'll be the first to know.
Mad Money's back after the break.
Coming up, was Papa John's able to deliver a strong quarter? Cramer sitting down with the CEO next.
Yesterday before the bell, Papa John's, the pizza chain known for better ingredients, better pizza, reported, I guess you have to call it a tough third quarter. Sales fell short of expectations while earnings came in at 16 cents a share. Now, that was right in line with estimates, but down 32 cents a year ago. And with North American same store sales down more than 8%, Papa John's cut its full-year profit outlook. Stock slipped half a percent yesterday and fell another 8% today. Just over two years ago, Todd Penegor's tenure as CEO. Well, the question is what will it take to win back the families who used to make Papa John's their Friday night order. So, let's check in with Todd Penegor, President and CEO of Papa John's. Mr. Penegor, welcome back to Mad Money.
Thanks for having us on, Jim. Good to see you.
Good to see you again, Todd. Now, I've got in front of me an Unbox Better, earn the right to be chosen again and again. Why do I want to be chosen by Papa John's?
It really is our commitment to strengthen the brand and strengthen our system. And when you think about what we've been founded on, better ingredients, better pizza, really a full circle moment for us. Not only to accentuate what makes us great all these years, six simple ingredients, fresh never frozen dough, fresh vegetables, real cheese, but build upon that and really make sure that we elevate and continue to become even better as we move forward. We know we got opportunities to amp up the flavoring of our cheese, make it a little more meltable and creamy. We've got opportunities to handle our dough even better in our restaurants. We know we can drive heat retention. This is really that commitment to come full circle to get ready to go back and really fight and make better famous again and make better known from Papa John's.
Well, I'm gonna push back a little on that because I like Papa John's and I've always liked Papa John's. I didn't know Papa John's wasn't as good as it could be. I knew that Domino's wasn't when Pat Doyle came in. But what makes you think that a really good pizza is going to be able to get more people than a really good pizza that you had before?
Well, what folks have told us is we're not delivering on our promise consistently enough. And our commitment is to really get back into our restaurants. Recommit to retraining, recommit to re-engaging with our employee base so we can deliver on our promise time and again. We've been a little too inconsistent, Jim. And we know that folks say, 'I love that Papa John's.' We know what the answer is. I'll never go to that other one. So, the opportunity is to get our team set up for success, drive optimization, leverage technology. We're putting a new POS into our restaurants that will allow less consumer non-facing tasks to be done by our teams and really get them focused on being the best pizza makers in the business. And that work is rolling out through the course of 2026 and into 2027.
Well, Todd, let me ask you what happened to this category. I mean the category was always there were a couple companies, big companies like yours that have money and they could go up against the mom and pops and they could do better. That was a Domino's thesis too. And then one by one, I mean, the category became very difficult. Pizza Hut, they kind of gave away Pizza Hut, I felt, at Yum. Domino's numbers just okay. This is a very good food that doesn't cost a lot. What happened to the category?
Yeah. I mean, pizza is still great value for the money and no matter what the trend is, folks continue to be fans of the pizza category. It's become a lot more competitive, Jim. You know, the competitive landscape's been such where there's been a lot of deep discounting. You know, folks have originally been able to get pizzas just on delivery and didn't have a lot of other food forms that could be delivered. Now, you can get anything delivered through DoorDash or Uber Eats. So, the competitive landscape has changed. So that's why we got to break out of that sea of sameness and really earn the right to have folks come to us time and again when they got so many choices that can be delivered. So they want high quality, they want value for the money, they want it made right, they want it made hot, and they want it delivered quickly to them. And we got to recommit to delivering on that promise to stand out from the competitive side.
I totally agree with that. But it costs money to be great, doesn't it?
Well, the good news is we start with a great spot. We've got all the money baked into, you know, the foundation of our better ingredients, better pizza. We'll take some commitment to go in and retrain in our restaurants. But what we've done is rolled back our commissary margin. It was ready to increase to 8% margin in 2027.
We've rolled that back to 4% to really create 100 basis points of support for our system on four-wall margin to be able to go out and compete. We also got caught up on technology. So we have the opportunity to roll our tech feedback from 1.75 to 1.5, so another 25 basis points of support. So we're really creating the fuel to fight for our franchise system. And one of the big things we've done is taken our national ad fund down from 6% to 5. And we're reinstituting our co-ops and reinstituting our local spend at a 2% level. So we can go play this game nationally as a great pizza chain but really win it locally and connect to the communities that we serve. That's the way the brand was created. That's the way it was up through 2023. It changed. We're going back to where we were in the past.
And the places that you're doing it aggressively, are they working? Are you getting a turn in the places that you're putting through your Unbox Better?
Yeah. So, Unbox Better is just rolling out. We've been doing a lot of training. We've been doing a lot of work on the technology front, but where we've actually reestablished our co-ops, we're seeing a couple hundred basis points of margin outperformance, or margin and sales outperformance, from the markets that don't have the co-ops. But importantly, what we do is if you look at our top quintile performers, those folks that are delivering on the promise versus our bottom quintile performers, there's a 400 basis point delta on sales performance and profit performance. So, we know if we deliver on the promise and deliver great pizza, the consumer will come back to us time and again.
Well, that's terrific. Now, I do want to ask you, you've got this UK division that's doing incredibly well. Have they instituted some of the things you're talking about or is it just frankly that it's always worked there and it will continue to work?
No, they did all this heavy lifting over the course of the last two and a half years, Jim. They renovated the food. They refocused on operational excellence. They put more marketing into the market. They've simplified and shrunk the number of franchises that we've had in that market. And we were plus 7% last quarter and plus 16 on a two-year and have a ton of momentum in that market right now. So the recipe and the turnaround that happened in the UK over the last two and a half years is a big part of the recipe for success that we can replicate here in the US.
I think that's a great idea. I mean UK is very, very strong. Your stock is not expensive. The category hasn't been destroyed. It's still a very value-oriented category. So Todd, I think you're doing a lot of things right. This could be it. It's great that you came back on Mad Money.
Thanks Jim. Really appreciate the time.
Absolutely. That's Todd Penegor, the CEO of Papa John's. Stock's down, but I like that plan. They did it in the UK. It's working well. Mad Money is back after the break.
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