CNBC’s Jim Cramer on Friday unveiled a list of four new public retail stocks that investors should stay away from.
The Mad Money host said that as companies that went public last year continue to lose their newness and value, knowing which losing stocks to avoid can help investors choose winning stocks.
“When you see a massive flood of IPOs, it’s often a very bad sign,” he said. “I hope you took my advice and stay away from those names, because if that was the case, I think you could save a lot of money,” he added.
Here are four retailers Cramer warned investors against:
Cramer said Allbirds, which went public in November and whose share price has been declining since peaking at $32 that day, is too turbulent a stock to predict. He blamed the price drop on reckless buyers.
“The problem with Allbirds and its fellow travelers is that too many naive investors bought this thing without paying attention to the price, simply because they liked the brand,” Cramer said.
Allbirds fell 6.22% on Friday. “It’s just not known where he’ll find the floor,” despite the company reporting an optimistic outlook for the full year on Feb. 24, Cramer said.
- On hold
Shoe company On Holding, which went public last September, is profitable but not yet available to buy, Cramer said. The fact that the company manufactures almost all of its shoes in Vietnam, where precautions were taken during the coronavirus delta wave, could leave the company facing “the mother of all supply chain problems,” Cramer said.
He added that On Holding could be a purchase in the future, but it’s not yet clear when that will happen. Shares fell 3.04% on Friday.
- Runway rental
Cramer said Rent the Runway shares seem to have bottomed out in the single digits of late, but are still too unprofitable to invest. He added that the designer clothing and accessories rental service reported strong user and revenue growth in the first quarter of this year, its losses and depleted inventory making it unreliable. “I’d rather buy Maisie,” he said.
Shares of Rent the Runway fell 4.55% on Friday.
Kramer said “no thanks” to luxury thrift store RealReal, citing the company’s “rather discouraging” guidance for the year, which was reported on Feb. 23, as well as larger-than-expected losses.
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Denial of responsibility