CNBC’s Jim Cramer said one of the biggest overlooked risks to the market is a wave of large initial public offerings that could drain liquidity from stocks.
“Bull markets can be killed by oversupply. Too many big IPOs and they collapse under their own weight,” the “Mad Money” host said Monday.
Investors are looking forward to potential IPOs later this year from OpenAI, SpaceX, and Anthropic, which are expected to draw huge institutional and retail demand. With the hype around artificial intelligence still growing, Kramer said these products could attract a disproportionate share of investor capital and pull money out of society. S&P500 and other stocks.
In OpenAI’s case, the timing could depend on the outcome of a legal battle involving Elon Musk and Sam Altman. Jim Cramer said the key question is whether the company can eventually go public.
“If that happens, you’re going to be siphoning off a hell of a lot of money, because the valuation of this thing could be in the trillions of dollars,” he said. “That money has to come from somewhere. It’s probably going to come from other markets.”
Mr. Musk’s SpaceX could bring in just as much, if not more, capital market inflows. Mr. Cramer estimates that the company could be worth more than $1 trillion because of Mr. Musk’s track record of delivering returns for shareholders. Tesla’s Chief executive.
“Given that it’s Mr. Musk, that number could be $2.5 trillion,” he said.
Meanwhile, Anthropic has emerged as another major market favorite, especially among institutional investors. Kramer said the company’s enterprise-focused model is particularly attractive on Wall Street.
“It’s tenacious. It’s not fickle like consumers,” he said, adding that demand for the company’s stock is “insane” and that it may be closer to profitability than its peers.
Kramer said that no matter how exciting a company is, its success as a public stock company can come at the expense of existing stocks and capital. He acknowledged that while it’s not an immediate risk, it shouldn’t be ignored.
“Given all the money going into these three likely trades, you can only imagine how much all the other stocks are going to suffer,” Cramer said.
“Bulls run on money,” he added. “If these three IPOs are decided at once, the funds could dry up.”
