Jim Cramer highlighted significant apprehensions regarding SpaceX's initial public offering (IPO), which is set to begin trading at a fixed price of $135 per share, valuing the company at $1.77 trillion. The IPO has seen extraordinary demand, reportedly four times oversubscribed, which Cramer believes could lead to excessive volatility.
He cautioned that a rush of inexperienced investors placing market orders could inflate the stock price unsustainably, potentially allowing SpaceX to momentarily rival the largest publicly traded companies. Cramer referenced past IPOs that experienced initial spikes followed by declines, emphasizing that a controlled debut is preferable for long-term value creation.
He warned that while a brief valuation of $4 to $5 trillion might be possible, such rapid increases are rarely sustainable and can lead to disastrous outcomes