CNBC’s Jim Cramer on Monday urged investors not to buy Getty Images stock until the stock begins to decline.
“You need to stay away from post-SPAC stocks that explode higher right after the merger. The history of these things is really ugly when they come back to earth,” said the Mad Money host.
Getty Images went public this year after announcing in 2021 that it would go public through a SPAC, or special-purpose acquisition company, with Neuberger Berman and CC Capital. Getty was previously in the public market before being taken private by a private equity firm in 2008.
Since announcing the closing of the SPAC deal on July 22, the stock has posted significant gains, climbing from around $9 on July 22 to around $34 on Monday.
According to Cramer, the stock’s rise is due to an SEC filing released shortly after the deal closed, showing that nearly all SPAC investors chose to redeem their shares for cash rather than take over shares in the new Getty Images. As a result, investors saw an attractive opportunity to engineer a short squeeze, Cramer said.
Those investors are still trying to squeeze, which is why the stock has continued to rally lately, he said. Getty shares closed down 10% on Monday.
Cramer added that while the stock isn’t currently available for purchase, he expects it to fall as the remaining inventors sell their positions. “Stay away until it cools down,” he said.
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