Don't be a "knucklehead market-ordering buyer" who purchases Uber shares at any price when they go public Friday, Jim Cramer says. In fact, he recommends that those who got pre-IPO shares sell them as soon as the stock opens for trading.
"I suggest if you get stock [pre-IPO], the best time to sell ... is that opening price," Cramer said Thursday in an exclusive video-conference call with members of his Action Alerts PLUS club for investors.
"Of course it can go higher, but then you will be devoid of the retail market buying that might have brought it up high to begin with."
Although lead underwriter Morgan Stanley priced the IPO at $45 a share on Thursday evening, Cramer said the Uber stock could jump higher when trading begins Friday under the ticker symbol "UBER." But he said that Morgan Stanley has an ace in the hole -- a bunch of extra shares at its disposal that the firm can dump on the open market if Uber's first trading day gets out of control.
"My behind-the-scene talks indicate that Morgan Stanley is going to try to halt the buying at the $80 level by offering company stock there," Cramer said. "That could sate even the knucklehead market ordering buyers. I am begging you not to be one."
He said that because after Uber starts trading, "you will most likely see lots of selling by accounts that aren't as restricted as management or Morgan Stanley might like. For instance, there are many convertible securities and they will be ripe for the selling against. ... These could be what I call 'mean' sellers -- meaning they don't have any price [where] they won't sell because they are up so much."
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