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.
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.
“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.”
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.
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.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.