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"They will screw up the market": Jim Cramer, on the effects of WeWork's IPO in terms of truth.
Like the Fed, some would say, Jim Cramer has a dual mandate: to entertain and energize the markets. He is certainly excellent as an artist. But this morning, in CNBC's "Squawk Box", he blurted out how concerned he was about the flickering stock market, so much so that a single, messy, overexpressed stock market will "mess up" the whole thing. world. walk.
He wants the WeWork contract to "disappear," he said. "I do not want WeWork. I mean, I do not want WeWork at all costs. "
Few companies rushed to an IPO with greater losses than WeWork – Uber could have been the only one.
But what kills the appetite of this deal is not just the current mega-losses, but the mega-losses forever until funds run out. Here, I see his income report: How can a company with a turnover of 1.8 billion dollars lose 1.9 billion dollars? WeWork shows how. And it's not just that Uber and Lyft share prices have plummeted 29% and 48% from their respective highs since they went public.
WeWork's CEO, Adam Neumann, decided to completely control the company and ransom shareholders with OTC transactions in various ways.
Today, WeWork – under its new name, The We Co., has announced its intention to include its shares on the Nasdaq in its modified IPO filing (S-1 / A). In an IPO, new investors buy shares that the company and / or insiders sell. This tactic allows insiders to offload some of their shares and the company can raise a ton of new money from new investors to burn – which WeWork will do.
A month ago, I booed the initial deposit through the WeWork IPO: In Hilaryous IPO Filing, WeWork dreams of a $ 3 trillion turnover, but billions of dollars in losses. Massacre with red ink coming in 2nd half. But I will not poop today, I will let Cramer do it. He is much more colorful than me.
But one thing I want to emphasize: the "valuation" of the company that is being summed up, as defined by the price of the future IPO. Almost every day, there is a new number, and investors refuse to nibble, then the lowest number the next day and the number several billion below the previous figure, and investors still refuse to nibble. And then, there is an even lower number, as if it were a devil's race, what stock does it belong to.
As a private company, WeWork was "valued" at $ 47 billion. This means that during the last round of fundraising, investors who invested money in the company did so by paying a price per share valuing all of the money. business at $ 47 billion. All of this represents a lot of closed-door hocus-pocuses, the purpose of which is to create a feeding frenzy among the next group of investors, including stock market investors.
In the early morning, the value of the IPO had dropped to $ 10 billion, according to leaks conscientiously reported by CNBC, Reuters and elsewhere. From $ 47 billion to $ 10 billion, the value would be a collapse of 79%.
Cramer is worried that this ill-founded, "downward" agreement, as he has said, will in and of itself compromise the market that it would have taken years to pump and exaggerate. And here's what he said on CNBC:
"We do not want this agreement. I would like them to go there.
"I just want it to go away. I do not want WeWork. I mean, I do not want WeWork at all costs. It's too high in the world. "
"It looks like" what plant. "But there are some offers coming in, and they can really remove the air from any market."
"They can just say," We are awful, and we will just wait to be good again. "Why do they just have to keep going down, [with the IPO price]?
CNBC co-presenter: "Because they need money."
"I know, but we do not want to give them money. They will just screw up the market. "
And he urged everyone who watched the show: "Do you want to stop WeWork agreement, please! Let's stop WeWork. "
Cramer is worried that this erroneous IPO WeWork deal, on its own, could be the straw that breaks the camel's back – it's the overabundance of market beats and ridiculous market prices.
A defeat on the hyper-inflated bond market can blow everything up at this point... WOLF STREET REPORT: Here's what worries me and it's not a recession
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