Jim Cramer, a celebrity on Wall Street and a well-known financial host on CNBC, said on Thursday that he was worried that SpaceX’s stock price would rise too high and too fast after its listing. "At this time tomorrow (Friday), if the situation really gets out of control, we may have a new champion, a new stock with the highest market value in the world: SpaceX." Cramer said, he is the host of CNBC's "Mad Money" program.
Kramer
SpaceX will officially land on Nasdaq on Friday, local time in the United States. The company has set an IPO price of $135 per share on Thursday, raising a record $75 billion and valuing it at $1.77 trillion.
Demand for the IPO was extremely strong and it was said to be four times oversubscribed. While such booming demand is generally viewed as a positive, Cramer warned that too much demand could also create problems of its own.
In his view, the most ideal IPO usually opens with a moderate increase from the issue price, and then trades in a more orderly manner. SpaceX faces a special situation: strong demand from institutional investors, enthusiastic pursuit by retail investors, and passive buying by future index funds. The combination of these factors may push SpaceX stock price to rise sharply soon after the market opens.
Cramer noted that he is particularly concerned that a large number of inexperienced investors will trade using market orders rather than limit orders, which could push stock prices to unsustainable levels. "These are like new, unguided missiles that are simply uncontrollable," Cramer said.
Cramer said that if enough buyers flood in at the same time, SpaceX's market capitalization could reach or even exceed the level of the world's largest listed companies in a short period of time. But he warned that such moves often don't end well.
"Is it really possible that a market value of $4 trillion to $5 trillion is possible? Maybe for a few minutes, as short as the time it takes to hook a big marlin with a harpoon," he said. "Of course it is an amazing big fish, but if it cannot be taxidermied and hung up quickly, it will soon stink."
Cramer also mentioned Figma, which will be launched in July 2025, and Cerebras, which will be launched in May this year. He said that these IPOs all rose all the way in the early stages of listing, but then entered a "long decline process."
Cramer concluded that the goal of an IPO should not be a stunning first-day surge, but a controlled listing that allows the stock to gradually accumulate value over time. "We want the transaction to be controllable, otherwise it could be catastrophic," he said.