Market Overview

Cramer: Uber Lockup Expiration Could Be Much Uglier Than Beyond Meat

Cramer: Uber Lockup Expiration Could Be Much Uglier Than Beyond Meat

Investors assuming Uber Technologies Inc's (NYSE: UBER) upcoming lockup expiration will be a non-event could wake up to a "very rude awakening," according to CNBC's Jim Cramer.

What Happened

Plant-based food maker Beyond Meat Inc (NASDAQ: BYND) saw its stock trade lower at one point by more than 20% Tuesday after its lockup expiration took place.

The supply of new shares that are eligible to trade on the public market for the first time simply "overwhelmed the demand" shown by buyers, Cramer said on Tuesday's "Mad Money."

Investors could expect Uber's stock to see a similar reaction, as new investors will have an opportunity to get out of the stock for the first time, Cramer said. Specifically, 763 million more shares will be eligible to trade in the first full week of November, he said. 

Why It's Important

The math behind Uber's lockup implies $24 billion in new stock going live if shares of Uber hold steady at around $32 per share, Cramer said.

Investors are likely to be eager to hit the sell button because their investments haven't panned out as expected, he said. 

"I suspect many of the shareholders will want out because this unicorn's been a bust and they don't want to lose more than they've already lost already."

What's Next

Beyond Meat investors felt some pain on Tuesday, but Uber's lockup expiration is "big enough to hobble the entire market," Cramer said.

Billions in new shares will flood the market and may not be matched with billions in cash entering the market, the CNBC host said. 

"I hope we can absorb them without too much pain, but hope is not part of the equation." 

Uber shares were trading 2.25% at $33.17 at the time of publication, while Beyond Meat shares were up 8.34% at $88.83. 

Related Links:

Analysts Slice Beyond Meat Price Targets Ahead Of Share Lockup Expiration

PreMarket Prep: Buy The Dip Still Working

Photo courtesy of Uber. 

Posted-In: CNBC Jim Cramer Lockup Expiration Mad Money ride-hailingNews Media Best of Benzinga


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