CNBC's Jim Cramer said Wednesday he believes there is "rabid money" interested in upcoming technology IPOs, but urged younger investors not to pursue DoorDash once the third-party public goes public.
"When people know the brand, younger investors just say, 'You know what, get me something,'" Cramer said in "Squawk on the Street". "DoorDash is used by a lot of younger people, both in the suburbs and in." I think you will experience incredible excitement. "
DoorDash, which is expected to start trading Wednesday, sold shares as part of its initial public offering at a price of $ 102 each, above the target range of $ 90-95.
Cramer urged young investors to be careful with the hunt for the stock, which is expected to burst upon opening. The "Mad Money" host previously advised investors to buy it for just under $ 100 per share.
"I don't want them to lose their discipline because then we start a period of 1998, 1999," Cramer said, citing speculation in technology stocks that fueled the dot-com bubble.
DoorDash marks the first IPO in a wave of consumer tech in the late year, which includes the expected debut of the online rental market Airbnb on Thursday. The online stock trading app Robinhood, which is also preferred by younger investors, is said to have hired Goldman Sachs to lead a possible IPO next year.
There's just a general appetite for public offerings from technology companies, Cramer said. "There is a lot of money, rabid money. I think there is money that basically says, 'We really don't care what the opening price is going to be,'" he added. "With a lot of these market buyers there won't be much discipline. They won't set a price limit."
DoorDash in particular has seen tremendous growth during the coronavirus pandemic. Orders that stay at home are driving more consumers to choose to have groceries delivered to their door. The company's order volume for the first nine months of this year was $ 16.5 billion, compared with $ 5.5 billion in the same window in 2019.
Many on Wall Street are wondering what will happen to DoorDash's business after the worst of the pandemic has subsided.
While recognizing that people would rather dine in restaurants than order delivery, Cramer said, "I don't think DoorDash will go away." He also noted that if health and economic situations improve and the market for DoorDash expands, there could be more restaurants in the store. Cramer has temporarily closed his own restaurants in New York City because of the pandemic.
Despite the rise in DoorDash in 2020, Cramer said the business had worrisome aspects that warrant investor consideration.
"I think it's more of a duopoly than before because of Uber Eats. Good deal. Good deal? I don't know. It's still a delivery system," Cramer said. "They made a suburban footprint that is really brilliant, but … in the end we know that the moat is only as good as the fact that they are low-priced and have good technology."