A dry IPO market might be worsened by the collapse of Silicon Valley Bank, which signals 2 things that are “very positive for the stock market,” CNBC’s Jim Cramer stated on Monday.
First, existing business that are entrenched in their markets will no longer be challenged by active brand-new gamers, Cramer stated, as they lack money and can not quickly raise more cash.
Second, due to the fact that there is no brand-new competitors for existing business, that likewise indicates there will be no brand-new competitors for their stocks, Cramer stated.
“The incumbents are winning, and that means their earnings could be better than anyone thinks,” Cramer stated.
Take McDonald’s, for instance. The business’s stock struck a brand-new high up on Monday, in part due to the fact that of layoffs.
If you lay individuals off in practically any market, and your sales are excellent, your business stock will go higher, Cramer stated.
“McDonald’s is the ultimate example of the incumbent winning,” Cramer stated.
The phenomenon appears in a host of markets. Other recognized names that might see an advantage for their stocks consist of Amazon, Alphabet or Meta Platforms, according to Cramer.
“Bottom line? When there’s no new competitors, no new stock and no new money, to the incumbent goes the spoils,” Cramer stated.
