Jim Cramer expressed significant concerns regarding the upcoming SpaceX IPO, particularly about the nature of its investor base. He noted that while the IPO is reportedly four times oversubscribed, indicating strong demand, the risk lies in the presence of speculators who may not be committed to holding their shares long-term.
Cramer warned that these short-term traders could create volatility by selling quickly after the stock begins trading, which could negatively impact the share price. He advocated for a healthier IPO environment where the majority of buyers are retail investors willing to hold their shares for years, alongside institutional investors who have made long-term commitments.
Cramer suggested that a tightly allocated offering could mitigate the influence of these short-term traders, and he expressed a preference for receiving fewer shares than requested, as it would indicate strong demand. He concluded that while the current oversubscription is a positive sign, a higher level of demand would provide him with greater confidence in the IPO's stability