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Goldman CEO Warns Against Market Euphoria Amid DoorDash, AirBnB IPO Frenzy

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Goldman CEO Warns Against Market Euphoria Amid DoorDash, AirBnB IPO Frenzy

Goldman Sachs Group Inc (NYSE: GS) Chairman and CEO David Solomon, in an interview with CNBC "Squawk Box," expressed concern on the current market euphoria and the Federal Reserve's easy monetary policy.

What Happened: Solomon said the Fed’s cheap money has an impact on the market. The Fed’s intervention and easy monetary policy were essential to prevent an economic downturn but it has led to asset inflation.

Solomon said that easy money had made its way into the equities, which has led to the current market euphoria that can be seen in recent initial public offerings.

DoorDash Inc (NYSE: DASH) and AirBnB Inc (NASDAQ: ABNB) had solid IPO debuts, with both companies opening at about double their IPO prices.

Goldman was an advisor on both deals and Solomon said that excessive retail participation and cheap money led to the vast IPO frenzy.

Related story: What Warren Buffett Says About High-Profile IPOs Like Airbnb, DoorDash

Why It Matters: “I think a bunch of these are a great business, but obviously the market at the moment is pricing in perfection execution and enormous growth for a very long period of time,” Solomon said.

Cramer had criticized the investment banks on Friday for not factoring in the “new cohort” of younger investors while pricing the IPOs. “I don’t want to say that the market is broken, but the process of how we’re doing these deals is definitely broken,” Cramer said.

Solomon said, compared to 2000-01, the IPO process has become far more transparent and easier for retail investors. Goldman has developed a system that allows companies to obtain real-time information on market demand. As per Solomon, AirBnB used the new method.

“Despite making those choices, if people are going to come into the after-market and buy the stock and continue to run the stock price up, that’s something that’s very, very hard to control and very hard to think about,” Solomon warned.

 

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Posted-In: CNBC CNBC Squawk Box David SolomonNews IPOs Top Stories Tech Trading Ideas Best of Benzinga

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