Jim Cramer is discussing why he's watching Roblox (RBLX) - Get Roblox Report, how the market is starting to look up, and more on Amazon (AMZN) - Get Amazon.com, Inc. Report and other stocks in the video below:
Why Jim Cramer Thinks Things Are Looking Up
"Where did the sellers go? What happened to them? Far too often we don't reflect on where the sellers went to. Remember this is a market of stocks and you need buyers to pay up and suppliers to vanish for a market to roar as it did Monday," wrote Jim Cramer in his Real Money column Tuesday morning.
"I have some theories about why we can go up with such ease and they all revolve around the disappearance of sellers, which is more important at this moment than the strength of the buyers," he continued. "First, and most important, there's an absence of initial public offerings. I don't think the average investor or the newer trader, understands the pressure the IPOs can apply to the stock market. The whole process of bringing a stock public involves finding people who want to buy stock on the deal but also buy stock at the opening. Every real offering involves a substantial capital commitment. Most big accounts can't get a lot of stock on what's going to be a hot deal unless they put in for a huge amount of stock with a soft commitment to buying more when it opens. Given that they get a huge slug at the very low opening price it's only fair that they buy a lot at an extended price because the average will still be so much better than the run-of-the mill buyer."
"We have had 484 IPOs this year, which is 680% more than last year when we had only 62. That's a gigantic amount of supply. You must imagine that big firms have had to let go of a massive amount of stock to get these new deals. They weren't getting new money in so they had no choice but to sell. And sell. And sell," Cramer wrote.
How's Roblox Looking?
"While there might not be a lot of love for turbo-charged growth stocks left on Wall Street, some companies defy the trend, Cramer told viewers. Case in point, Roblox (RBLX) - Get Report, the online gaming platform that's proven to be a lot more than just a COVID winner," wrote TheStreet's Scott Rutt in his Mad Money recap. "After a strong debut via direct listing, shares of Roblox had seemingly stalled as many investors assumed the game maker had little to offer as our economy reopened. But after another strong quarter, shares shot up another 8.1% Monday, prompting Cramer to reiterate his position."
"Roblox has been growing like a weed, with active users up 37% year over year with no signs of slowing post-pandemic. The company now boasts 43.3 million daily active users on its platform, fueled by an ecosystem of developers creating new content on its platform," He continued. "Beyond its growth, Cramer said the company is in a strong position due to its free cash flow increasing 300% and by its expansion plans in China, which are running ahead of schedule. He remained confident that there is a lot more room to run in Roblox."