CNBC’s Jim Cramer is warning that investors be cautious about how they approach the market next week.
With multiple companies set to go public in the coming days, there could be new reasons for volatile trading.
“When we get a flood of initial public offerings, it’s usually a bad sign for the rest of the market,” the “Mad Money” host said Friday, “because money managers don’t have all this new money coming in, so they’ve got to sell holdings that are like these stocks in order to do some buying.”
After an already packed 2019 for initial public offerings, Wall Street has seen more than 110 companies go public thus far in 2020, up 5% from this point last year, Cramer pointed out.
“Given that September tends to be a bad month for the market,” he said, “I’m urging you to be prepared as these deals start flowing.”
Below is a roundup of Cramer’s reactions to the forthcoming IPOs:
Snowflake: “This thing’s going to be too red hot, unless you can get a piece of the actual deal, which would be fantastic,” he said. “It might be too expensive otherwise.”
Unity Software: “Not yet profitable.”
JFrog: “This is one of the most lucrative corners of the cloud-based software space.”
Sumo Logic: “I’m not familiar with this one, but what matters here is that you’ve got now four cloud deals coming next week, and that causes some portfolio managers to sell current cloud holdings [because] they have to make room for the new ones.”
Amwell: “Given that Teledoc’s merging with Livongo, the digital health coach, Amwell could slot right into the market as the only publicly traded pure play on telemedicine. That said, it’s still far from profitable.”
GoodRx: “At a time when people are paying close attention to their health and their bank accounts, GoodRx seems like a winner. Again, though, it all depends on price — you don’t want to buy something that comes in too hot.”
Palantir (direct listing): “Palantir’s a rapidly growing business, so it just might work, although recent reports suggest that the early interest hasn’t been as strong as the company or anybody else expected, for that matter.”
Asana (direct listing): “Asana’s got a terrific growth rate — 82% in its most recent fiscal year, very few have that — but it’s also a consistent money loser. I think it’ll be a good test case for what this market values.”