Jim Cramer says investors should avoid this stock
Jim Cramer of CNBC
advised investors on Friday to avoid Ivanhoe Electric, a mining technology
company that will likely sell its shares in an IPO next week.
According to a
Securities Exchange Commission filing, the business, owned by mining
billionaire Robert Friedland, intends to issue about 14 million shares at a
price ranging from $11.75 to $12.50 each. According to IFR, the deal will now
close the following week instead of this week as initially anticipated.
“Even if … Ivanhoe Electric gets out the door next week,
I think you should avoid it. This is not the time to bet on an extremely
early-stage copper mining technology play,” the “Mad Money” host said.
The company's
statement that "there is material uncertainty that throws significant
question about its capacity to continue is the largest red flag from Ivanhoe,
he continued.
According to
Cramer investors accepted that level of risk a year or two ago. But in current
economy, are they really willing to gamble on a business that might go out
of business in a year or two?
“I can’t think of
a good reason why any sensible executive would want to bring their company
public right now unless they need the money very badly … or they expect their
business to deteriorate dramatically in the near future,” he said.
About Ivanhoe Electric
Ivanhoe Electric specializes
in the research and development of minerals and focuses on mining initiatives
that will help the electrification of transportation. This ambitious goal
focuses on metals like copper, gold, silver, nickel, cobalt, vanadium, and the
platinum group metal.
Currently, a
sizable number of resources essential to the development of EVs are produced in
Russia and China. In fact, one of the less-noticed implications of the
Ukrainian situation is that the troubled country has potentially enormous
undeveloped lithium supplies.
Ivanhoe, with its
headquarters in Vancouver, Canada, might be able to use North America's natural
resource to balance the scales in this imagined struggle for vital
minerals. Ivanhoe's planned initial public offering (IPO), according to The
Globe and Mail, will be the first fresh listing in North America in more than
four weeks.
Ivanhoe is growing
its presence in opposition to the economic flow. The risky choice may encourage
other businesses to attempt going public. Of course, the benefit for IE stock
in particular is that it has exclusive control of the spotlight.
Nevertheless,
there are other concerns, primarily related to the risks of being a test
subject. The equity market appears fragile, with the major indices down double
digits year so far. Additionally, a climate of rising borrowing costs is
unfavorable for enterprises focused on expansion because the Federal Reserve is
committed to reducing inflation by raising the benchmark interest rate.
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