Market Overview

Cramer: Markets Can't 'Handle' Wave Of Upcoming IPOs

Share:
Cramer: Markets Can't 'Handle' Wave Of Upcoming IPOs

Ride-hailing company Lyft's IPO is days away, and a handful of other "unicorns" are on deck for public listings.

The "coming onslaught" of new listings could prove to be a problem for investors for simple reasons of supply and demand, according to CNBC's Jim Cramer.

What Happened

Simply put, if the supply of new stocks to the market outstrips demand, then prices will go lower, Cramer said during his "Mad Money" show Tuesday. If there isn't enough new capital that can be put into IPOs in the coming quarters, investors may start selling their existing holdings, he said. 

The most likely scenario involves FAANG stocks coming under pressure, as they will be used as a "source of funds," Cramer said. But if demand for new stocks is even larger, investors could look to sell positions across oil, cloud, health care and transportation.

Why It's Important

Money managers who sell existing positions will "put pressure on the whole market," Cramer said. One possible solution that could ease the concerns: an immediate surge in merger and acquisitions.

This is the "only way we make it through the upcoming wave of IPOs in one piece," the CNBC host said. 

What's Next

Looking forward, Cramer said he isn't sure if the market will see a sufficient level of M&A deals to counter the "tsunami of newfound supply" in the markets.

Related Links:

The Lyft IPO: What You Need To Know

Recode Editor: Uber, Lyft's Business 'Tough Going From A Financial Point Of View'

 

Related Articles

View Comments and Join the Discussion!

Posted-In: FAANG Jim Cramer Lyft Mad MoneyNews IPOs Media Best of Benzinga