CNBC’s Jim Cramer warned Monday that a wave of large initial public offerings and capital raisings could threaten the bull market.
humanThe company behind Claude Inc. filed its IPO prospectus on Monday, bringing one of Wall Street’s most anticipated initial public offerings one step closer. Investors are excited to partner with Anthropic, a leader in AI. OpenAIBut Kramer said it would potentially require a huge amount of financing, which could put a strain on an already crowded market. With $148 billion raised through IPOs so far this year, he worries that the influx of new shares could outstrip investor demand and derail the stock rally.
“Politics can weaken the bull, and rising interest rates can strangle the bull. But if you want to kill a motherfucker, use the IPO spear and stab him over and over again,” the “Mad Money” host said. “The economy will only get weaker and weaker, and eventually it will be so weak that it can easily be wiped out by a bad quarter, a rate hike, or a run on credit unions.”
Kramer emphasized that his concerns are not about the feasibility of AI itself. Unlike the speculative Internet startups that collapsed in the dot-com bust of 2000, many of today’s leading technology companies have established businesses and real demand for their products.
“This time the companies are real. They tend to make a lot of money. We trusted them up until this moment and we will continue to trust them,” he said.
But Kramer believes there are troubling similarities between the two periods. That’s a huge amount of money raised. During the dot-com boom, massive stock sales ultimately depleted investors’ purchasing power and contributed to the market collapse. Supply exceeded investor demand.
He is concerned that similar moves could be made by the following companies: meta, alphabet, space x and oracle Use capital markets. Mr. Kramer warned that these large-scale fundraising efforts could absorb investors’ money that would otherwise flow to them. S&P500 This puts pressure on the overall market even though company fundamentals remain strong. Cramer’s Charitable Trust, a portfolio managed by CNBC’s investment club, owns shares in Meta and Alphabet.
“I think there is a lack of capital in both the bond market and the stock market,” he said.
This means the market may run out of the money a company needs to achieve its ambitions before investors see a return. “I’m not calling the top,” he said. “I’m just saying I don’t like what I see.”
