CNBC’s Jim Cramer warned traders that the market could be in trouble in the close to time period because it faces a massive provide of stock and a scarcity in demand from consumers.
“Between the IPOs and the big SPAC attack and the big secondaries, we’re being flooded with stock right now, so the market’s going to struggle until Wall Street turns off the spigot,” the “Mad Money” host stated Monday. “Unfortunately, there’s no sign of that happening yet, so you have to keep being careful.”
With greater than 100 preliminary public choices up to now this yr, first-quarter fundraising in U.S. markets has reached a report, Cramer stated. Several new IPOs are in the pipeline this week. High-profile corporations akin to cryptocurrency change Coinbase and buying and selling app Robinhood additionally plan to go public quickly.
The market has additionally seen rising curiosity in corporations selecting to go public by means of particular function acquisition corporations, broadly generally known as SPACs. This yr has seen extra SPAC choices executed than in all of 2020, Cramer famous.
“You can tell that there’s too much supply because many of these deals have started to fizzle,” Cramer stated. “These special purpose acquisition companies just keep coming, even though the whole SPAC ecosystem’s falling apart.”
Cramer additionally warned concerning the new provide of stock by means of secondary choices. He famous home-insurance supplier Lemonade, decking firm Azek and media conglomerate ViacomCBS have issued billions of recent shares in latest months.
This has created a provide demand imbalance in the market. There aren’t sufficient consumers placing cash to work and scooping up the slate of recent shares being traded, Cramer famous.
“With all this new supply, it’s no wonder the fast-growing tech stocks can’t find a bottom,” he stated. “We need to digest … all of the excess shares [and] that takes time.”
The market is being flooded with a provide of shares and the difficulty is just not getting the eye it deserves on Wall Street, CNBC’s Jim Cramer stated Monday.
The stock glut, pushed by a number of elements, is crucial market story proper now and is one other situation stunting shares from gaining traction, he stated on “Mad Money.”