Homepage / Technology / Cramer says homegamers should stay away from the red-hot Chinese IPO market
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election


Cramer says homegamers should stay away from the red-hot Chinese IPO market

Initial public offerings seem to be coming back in style on Wall Street, so CNBC’s Jim Cramer wanted to zoom in on one part of the market that caught CNBC’s attention in recent weeks: Chinese IPOs.

“Now, it’s not just that Chinese IPOs have been surging. According to the IPO experts at Renaissance Capital, we’ve had 149 deals so far in 2017, up more than 53 percent from this time last year,” the “Mad Money” host said. “By my count, 11 of those IPOs were for Chinese companies. More important, we’ve gotten nine Chinese deals in just the past nine weeks.”

Six of the eleven Chinese IPOs have gone up from where their deals priced:

China Rapid Finance, China’s largest consumer lending firm; Bright Scholar Education, one of the country’s biggest education groups; Best Inc., a logistics company with ties to e-commerce giant Alibaba; Zai Lab, a biopharmaceutical company; RYB Education, an education center operator; and Sogou, a search engine backed by Tencent.

Five of the eleven have gone down:

Secoo Holdings, a luxury online retailer; Qudian, an Alibaba-backed financial technology player; Four Seasons Education, a math education company; and Jianpu Technology, an online financial planning firm that came public on Thursday.

Cramer noted that “winners” Best Inc. and Zai Lab are down from when they started trading, having spiked the moment they came public and drifted down since.

“There’s been a great deal of justifiable skepticism surrounding many of these names,” the “Mad Money” host said.

For example, China Rapid Finance had to lower its IPO price range before coming public at the low end. That stock has since recovered, up almost 60 percent from the day of its IPO.

Best Inc. had to reduce the number of shares it was offering by 17 million and slash its price range by 25 percent, coming public at the bottom of its already-lowered range.

Cramer said Secoo Holdings’ deal was also a “bust,” with shares opening below its $13 IPO price at $12.10 and drifting down ever since.

Qudian, on the other hand, had a strong opening in October, opening $2 above the high end of its stated range and surging $10 on its first trading day.

“But QD got too hot too fast,” Cramer said. “Investors quickly began to have second thoughts and by Oct. 26, barely more than a week after the IPO, the stock had traded down to $22.80 — more than a buck below where the deal priced — and it’s only drifted lower since then. If you bought this thing when it started trading, you’ve been crushed.”

Investors got tired of Rise Education quickly, too, selling the $16 IPO down to just above $12 in three days. This week, shares spent some time in the single digits before bouncing back.

Since then, the reception has only gotten worse, Cramer said. Four Seasons Education incurred a 5 percent loss on its first trading day. Shares of Sogou, so far the best-performing Chinese IPO from the last several months, have remained fairly flat since it came public last Thursday.

Jianpu Technology’s stock opened for trading at $8 on Thursday and exited the week down over 10 percent, with shares at $7.17 as of Friday’s close.

“Looking at all of these deals from the People’s Republic, a couple of things jump out at me. For starters … four of the 11 Chinese IPOs this year have been education companies,” Cramer said.

This initially struck Cramer as odd, but then it made sense. The “Mad Money” host figured that, after seeing Bright Scholar Education’s positive run, from $10.50 when it came public to just over $22 as of Friday, its competitors followed suit.

“Here’s the bottom line of this sorry story: this recent spate of smaller Chinese IPOs are not for homegamers like you,” Cramer concluded. “If you don’t understand a company, you shouldn’t be playing with its stock, which is why so many people have gotten burned on these deals. How the heck are you supposed to differentiate between BEDU, REDU and FEDU … if you don’t live in China? So if you want exposure to the resurgent Chinese economy, and I do want that, I say you stick with the big established names you can get your head around. Stick with Alibaba. Stick with Baidu. They have financials that look like American companies and they have been fabulous long-term winners. The others? Stay away.”

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer’s world? Hit him up!
Mad Money TwitterJim Cramer TwitterFacebookInstagramVine

Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com

Source: Tech CNBC
Cramer says homegamers should stay away from the red-hot Chinese IPO market

Comments are closed.