A dry IPO market may be exacerbated by the collapse of Silicon Valley Bank, and that signals two things that are “very positive for the stock market,” CNBC’s Jim Cramer said Monday.
First, existing companies that are entrenched in their industries will no longer be challenged by nimble new players, Cramer said, because they lack liquidity and cannot easily raise more money.
Second, because there’s no new competition for existing companies, it also means there won’t be new competition for their stocks, Cramer said.
“The incumbents are winning, and that means their earnings could be better than we think,” Cramer said.
Take McDonald’s, For example. The company’s shares hit a new high on Monday, in part because of the layoffs.
If you’re laying off people in almost any industry and your sales are good, your company’s stock will rise, Cramer said.
“McDonald’s is the ultimate example of incumbent victory,” Cramer said.
The phenomenon is evident in a host of industries. Other established names that could see an upside for their stocks include Amazon, Alphabet Or Metaplatformsaccording to Cramer.
“At the end of the day? When there are no new competitors, no new inventory, and no new money, the incumbent gets the spoils,” Cramer said.