Although the IPO market is on the rise, CNBC's Jim Cramer said he believes it has been “make or break” so far. He asked investors not to buy Amer Sports, which debuted on Thursday at a discount, saying the company's balance sheet was weak.
“So far, this looks like another out-of-favor IPO, even if its low share price allows it to get like this, I guess you could call it a good pop,” he said. “And I have to tell you, Amer Sports is a great example of the kind of deals I wish we wouldn't see.”
The company is known for a number of popular sports brands, including Wilson and Arc'Teryx. The stock opened at $13.40 per share, bringing its valuation to about $6.3 billion. The company had previously targeted a valuation of up to $8.7 billion. Amer Sports is one of the few IPOs whose debuts fell short of Wall Street's expectations, joined by Birkenstock and BrightSpring Health.
Amer Sports, which is saddled with $2.1 billion in debt, has a “less than ideal” balance sheet, according to Kramer. He pointed out that the company's bulletin presented revised numbers that assumed it would raise $1.6 billion, but its discount meant that it was only able to raise $1.37 billion.
Amer Sports has seen decent growth over the past few years, but most of that growth has come from sales in China, Kramer admitted. He said this kind of momentum cannot be replicated because it is due in large part to the end of lockdowns in the country. Cramer added that he is wary of companies with high exposure to China due to its faltering economy.
“Honestly, I think bankers are playing with fire when they try to sell things like Amer Sports,” he said. “I just hope it doesn't completely poison the IPO. In other words, underwriters: just say no.”
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