Cramer Discuss Peloton's Out-Of-Shape IPO, Investment Pro Offers Broader IPO Takeaways

Shares of the exercise equipment maker Peloton Interactive PTON fell 11% during the company's market debut on Thursday, partly due to poor timing, according to CNBC's Jim Cramer.

Cramer: Bad Timing

Peloton's stock was priced at $29 but opened for trading for the first time at $27, only to drift lower throughout the rest of the trading session.

The company boasts impressive revenue growth but no earnings, and the stock may have been more attractive at a lower valuation a few months ago, Cramer said on "Mad Money" Thursday. 

Money managers are becoming more stringent about investment criteria and many only want to invest in profitable companies, he said. 

"As recently as three or four months ago, Wall Street might have lapped it up," Cramer said.

At higher valuations, investors should avoid the temptation to rush to buy a "newly minted growth stock" like Peloton, the CNBC host said.

Investors should be aware of the "treacherous market" for fast-growing companies that come with big losses, he said. 

Timing is everything, and until this mindset changes for the better, Peloton's stock will "trade like a money-losing exercise company with no soul," Cramer said. 

Broader IPO Implications

The IPO market may be experiencing a bubble, as companies that raise capital in the private market at premium valuations are forced to justify the markup when looking to go private, Ben Harburg of MSA Capital told CNBC Friday.

This created a bubble for IPO stocks, but it may be short-lived, as companies will see "a lot more subdued" pre-IPO rounds to "make up" with a market that won't value companies so high so late in the cycle, he said. 

Investors will be on the lookout for companies that can show not only a path to profitability but the necessary scale and defensibility to do so, Harburg said.

Other companies that don't satisfy these conditions will now face a "lot of question marks," he said. 

Peloton shares were up 0.12% at $25.82 at the time of publication Friday. 

Related Links:

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Peloton Investor On Why Others Should Buy The Stock

Photo courtesy of Peloton.