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James Hyerczyk
US Stock Market Volatility

Blame the Fed, blame the election, blame overpriced technology stocks, but with multiple companies set to go public in the coming week, there could be new reasons for volatile trading.

CNBC’s Jim Cramer is warning that investors be cautious about how they approach the market given the number IPOs in the near future. It all comes down to competition for the investment dollar. Investors want to participate in the new issues, but in order to do this; they may be forced to sell current holding to raise the cash.

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“When we get a flood of initial public offerings, it’s usually a bad sign for the rest of the market,” Mad Money host Cramer said last week, “because money managers don’t have all this new money coming in, so they’ve got to sell holdings that are like these stocks in order to do some buying.”

Wall Street has seen more than 110 companies go public thus far in 2020, up 5% from this point last year, Cramer pointed out.

“Given that September trends to be a bad month for the market, he said, “I’m urging you to be prepared as these deals start flowing.”

Cramer’s Take on Current and Upcoming IPOs

  • Snowflake:  “This thing’s going to be too red hot, unless you can get a piece of the actual deal, which would be fantastic,” he said. “It might be too expensive otherwise.”
  • Unity Software:  “Not yet profitable.”
  • JFrong:  “This is one of the most lucrative corners of the cloud-based software space.”
  • Sumo Logic:  “I’m not familiar with this one, but what matters here is that you’ve got four cloud deals coming next week, and that causes some portfolio managers to sell current cloud holdings [because] they have to make room for the new ones.”
  • Amwell:  “Given that Teledoc’s merging with Livongo, the digital health coach, Amwell could slot right into the market as the only publicly traded pure play on telemedicine. That said, it’s still far from profitable.”
  • GoodRx:  “At a time when people are paying close attention to their health and their bank accounts, GoodRx seems like a winner. Again, though, it all depends on price – you don’t want to buy something that comes in too hot.”
  • Palantir (direct listing):  “Palantir’s a rapidly growing business, so it just might work, although recent reports suggest that the early interest hasn’t been as strong as the company or anybody else expected, for that matter.”
  • Asana (direct listing):  “Asana’s got a terrific growth rate – 82% in its most recent fiscal year, very few have that – but it’s also a consistent money loser. I think it’ll be a good test case for what this market values.”
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Snowflake Update

Shares of Snowflake closed down 10.39% Thursday, a day after the cloud company’s blockbuster market debut.

It’s a sharp drop from Wednesday’s close, when shares were up more than 111%, giving Snowflake a $70.4 billion market capitalization. The company’s market cap dropped to $63.1 billion at Thursday’s market close.

Snowflake raised more than $3 billion based on its opening price, the most ever for a software company. The stock trades under the symbol SNOW.

Unity Software Prices IPO Above Range at $52

Video game software developer Unity priced its IPO above the expected range on Thursday in an offering that initially values the company at $13.7 billion, CNBC has confirmed.

Unity sold shares at $52 apiece, after lifting the range on Wednesday to between $44 and $48. Reuters was first to report on pricing.

For a look at all of today’s economic events, check out our economic calendar.
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