Market Oversupply: Jim Cramer's Advice for SPACs, IPOs

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Is there an oversupply in the market?

"What's the most important story affecting the market? No, it's not imploding hedge funds or the pandemic. It's the glut of new supply that's hitting investors from every angle," wrote Scott Rutt in his Mad Money recap. "First, there are traditional IPOs. This quarter was the biggest quarter for new public offerings since 2000, with over 100 deals for investors to digest. The more IPOs we see, the lower quality they are, Cramer said, and that's a huge drag on the market."

"But IPOs aren't the only problem. We've also seen a record in companies coming public via special purpose acquisition companies, or SPACs. We saw almost 300 SPAC deals this quarter, more than all of 2020," Rutt continued. "Adding to IPOs and SPACs are companies performing secondary offerings. Here, too, we're seeing record levels of activities as companies try and take advantage of soaring share prices to raise additional capital. There's also a wave of insider selling as the lockup periods from last year's IPOs are expiring, allowing insiders to finally sell their shares."

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