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Why Jim Cramer Is Carefully Watching IPO Lockup Periods

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What happens when there's an oversupply in the markets?

"This market may seem unstoppable, Cramer told viewers, but there is one thing that keeps him up at night... oversupply. He said last year there were a ton of red-hot IPOs and companies coming public via reverse mergers with specialty purpose acquisition companies, or SPACs. The problem? All of these deals have lockup periods that are now expiring, releasing millions of new shares into the market," wrote TheStreet's Scott Rutt in his Mad Money recap on Friday. "Cramer said he's been a big fan of online insurance company Lemonade (LMND) , but last month shares surged to $137 before suddenly plunging 14%. Why? Because the lockup period expired and sellers were finally able to sell. Cramer advised taking profits in this stock."

Watch: Everything Jim Cramer Is Watching in the Stock Market Monday

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