CNBC’s Jim Cramer warned investors that the market could get into trouble in the near future as it faces massive supply of stocks and a lack of demand from buyers.
“Between the IPOs and the big SPAC attack and the big secondaries, we’re being flooded with stocks right now. So the market will fight until Wall Street turns the spigot off.”Bad money“said the host on Monday.” Unfortunately, there is no evidence of this so far, so one has to continue to be careful. “
With more than 100 initial public offerings this year, fundraising has hit a record in the US markets in the first quarter, according to Cramer. Several new IPOs are planned for this week. High profile companies like cryptocurrency exchange Coinbase and the trading app Robinhood are also planning to go public soon.
The market has also seen increasing interest in companies choosing to go public through special purpose vehicles commonly known as SPACs. According to SPamer, more SPAC offers were carried out this year than in all of 2020.
“You can tell that there is too much supply because many of these deals have stalled,” said Cramer. “These special-purpose acquisition companies keep coming back even as the entire SPAC ecosystem is falling apart.”
Cramer also warned of the new offer of inventory through secondary offers. He noticed home insurers lemonadeDecking company Azek and media conglomerate ViacomCBS have issued billions of new shares in the past few months.
This has created an imbalance between supply and demand in the market. There aren’t enough buyers who put the money to work and scoop up the list of newly traded stocks, Cramer noted.
“With all of this new offering, it’s no wonder that fast-growing technology stocks are failing to bottom,” he said. “We have to … digest any excess [and] this will need time. “
The market is being flooded with supply of stocks and the issue is not getting the attention it deserves on Wall Street, CNBC’s Jim Cramer said Monday.
The glut of stocks, driven by multiple factors, is the main market story right now and another condition preventing stocks from gaining traction, he said on “Bad money. “