"Dangerous Game"...Jim Cramer Warns SK Hynix's Capital Absorption Capacity

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Ahead of SK Hynix's entry into the US stock market, a warning has emerged, putting a brake on Wall Street's fervent subscription enthusiasm. Jim Cramer's point that the market needs to consider whether there is enough capital to absorb the $28 billion deal without difficulty has made the final price, rather than oversubscription, a variable for the listing's success.

According to CNBC on July 9 (local time), Jim Cramer, host of CNBC's Mad Money, expressed concern about the market's capital absorption capacity ahead of SK Hynix's US stock market listing. Cramer said, "Does the market have enough money to digest the SK Hynix deal at a reasonable price?" and added, "Even Rivian Automotive (RIVN) couldn't digest the deal at a few points below its price at the time. Be careful."

Cramer evaluated SK Hynix as a key player in the global memory industry. He mentioned Samsung Electronics and SK Hynix as major memory companies, stating, "We are very proud of Micron Technology (MU), but SK Hynix is a really big company." This indicates that he was wary of the $28 billion deal potentially absorbing a large amount of market capital, separate from the assessment of SK Hynix's business competitiveness.

He also issued a warning about the overheated atmosphere surrounding listing demand. Cramer said on X (formerly Twitter), "Underwriters are letting everyone know how much the SK Hynix deal is oversubscribed," calling it a "dangerous game." He continued, "I still hope they price it at a slight discount. Not a discount big enough to scare people off, but enough to keep the tension in the deal."

Cramer distinguished the SK Hynix deal from the previous situation where Samsung Electronics' strong earnings received a lukewarm market response. He said, "The poor reaction to Samsung Electronics' excellent quarterly results is somewhat separate from other situations happening here, and it includes the $28 billion that could go to SK Hynix, which is a better company." This explains that SK Hynix, facing large-scale fundraising, stands at the center of investment capital flows in the memory sector.

Cramer's warning targeted the transaction price and market capital size rather than questioning SK Hynix's competitiveness. The core of Cramer's emphasis was that instead of raising the price by highlighting oversubscription, a price should be left that allows investors to make additional purchases after the listing.

[Article Summary]

-Ahead of SK Hynix's $28 billion US stock market deal, Jim Cramer warned about the market's capital absorption capacity.

-Cramer called the underwriters' actions of excessively emphasizing oversubscription a "dangerous game."

-Cramer emphasized that a certain level of discount is necessary for the final price, regardless of SK Hynix's competitiveness.

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