On Friday, CNBC’s Jim Cramer provided a list of four newly opened retail stocks that investors should avoid.
The “Mad Money” host said that as companies that went public last year continue to lose their novelty and value, knowing which losing stocks to avoid can help investors pick winners.
“When you see a massive flood of IPOs, that’s often a really bad sign,” he said. “I hope you took my advice and walked away from those names because if you did I think you could have saved a lot of money,” he added.
Here are the four retail companies Cramer warned investors against:
- all the birds
Cramer said Allbirds, which went public in November and whose share price has been falling since peaking at $32 the same day, is too turbulent a stock to predict its move. He blamed the stock price drop on reckless buyers.
“The problem with Allbirds and its fellow travelers was that there were far too many naïve investors buying this thing without caring about the price just because they liked the brand,” Cramer said.
Allbirds was down 6.22% on Friday. “We just don’t know where it will find a bottom,” although the company announced an upbeat full-year outlook on Feb. 24, Cramer said.
On Holding, a shoe company that went public last September, is profitable but still not a buy, Cramer said. The fact that the company produces almost all of its shoes in Vietnam, which took safety precautions during the Coronavirus delta wave, could lead the company to deal with “the mother of all supply chain problems”. down the line,” Cramer said.
He added that On Holding could become a buy in the future, but it’s unclear when that will be. The stock fell 3.04% on Friday.
- Rent the track
Cramer said Rent the Runway’s stock appears to have bottomed in the single digits recently, but is still too unprofitable to invest in. He added that the designer clothing and accessories rental service saw strong user and revenue growth in the first quarter of this year, but its losses and battered stock make it unreliable. “I’d rather buy Macy’s,” he said.
Rent the Runway stock fell 4.55% on Friday.
- The real real
Cramer said “no thanks” to luxury consignment store RealReal, citing the company’s “rather disheartening” outlook for the year announced Feb. 23, as well as worse-than-expected losses.
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