UKTN’s Jim Cramer warned investors that the market could be struggling in the near term as it faces a massive supply of stocks and a shortage of demand from buyers.
“Between the IPOs and the big SPAC attack and the big secondaries, we’re inundated with stocks right now, so the market is going to struggle until Wall Street turns off the tap,” the host said Monday. of “Mad Money”. “Unfortunately, there is no sign of this happening yet, so you have to continue to be careful.”
With more than 100 initial public offerings to date this year, first-quarter fundraising in U.S. markets has hit an all-time high, Cramer said. Several new IPOs are underway this week. Leading companies such as the Coinbase cryptocurrency exchange and the Robinhood trading app are also planning to go public soon.
The market has also seen increasing interest in companies choosing to go public through special purpose acquisition companies, widely known as PSPC. This year, more PSPC offers were executed than in all of 2020, Cramer noted.
“You can tell there is too much supply because a lot of these deals have started to run out of steam,” Cramer said. “These special purpose acquisition companies keep arriving, even as the entire PSPC ecosystem collapses.”
Cramer also cautioned against the new stock offering via side offers. He noted that home insurance provider Lemonade, patio company Azek and media conglomerate ViacomCBS have issued billions of new shares in recent months.
This created an imbalance between supply and demand in the market. There aren’t enough buyers putting money to work and picking up the list of new stocks being traded, Cramer noted.
“With all this new supply, it’s no wonder that fast growing tech stocks can’t find bottom,” he said. “We have to digest … all the excess stocks [and] That takes time. “
The market is inundated with inventory and the problem is not getting the attention it deserves on Wall Street, UKTN’s Jim Cramer said Monday.
The overabundance of stocks, driven by multiple factors, is the biggest market story right now and is another condition that keeps stocks from gaining ground, he said of “Mad Money. “.