CNBC’s Jim Cramer on Monday told investors to refrain from buying shares of Getty Images until the stock sees declines.
“You have to stay away from any post-SPAC stock that explodes higher right after its merger. The history of these things is real ugly as they come back to earth,” the “Mad Money” host said.
Getty Images went public this year after announcing in 2021 that it would go public through a SPAC, or special purpose acquisition company, deal with Neuberger Berman and CC Capital. Getty was previously on the public market, before an acquisition by a private equity firm took it private in 2008.
Since announcing the SPAC deal’s completion on July 22, the stock has seen sizable gains, increasing from around $9 on July 22 to around $34 on Monday.
According to Cramer, the stock’s rise can be attributed to an SEC filing released shortly after the deal closed that revealed nearly all of the SPAC investors elected to redeem their shares for cash instead of taking shares in the new Getty Images. As a result, investors saw an attractive opportunity to engineer a short squeeze, Cramer said.
These investors are still attempting a squeeze, which is why the stock has continued to rally recently, he said. Shares of Getty closed up 10% on Monday.
Cramer added that while the stock isn’t currently a buy, he expects it to come down as the remaining inventors sell off their positions. “Stay away until it cools off,” he said.
(With inputs from CNBC)