CNBC’s Jim Cramer has expressed his support for the initial public offering of Viking Holdings Ltd (NYSE:VIK), despite its high valuation.
What Happened: Cramer, on his show “Mad Money” on Thursday, discussed the IPO of Viking, a luxury cruise line, which is the largest IPO of the year so far, reported CNBC.
He noted that Viking’s stock is more expensive than its peers but still believes it’s a good investment.
Viking’s IPO was priced at $24 per share and began trading at $26.15 on Wednesday, closing at $26.10. The stock further rose to $26.99 on Thursday.
"Even though Viking's somewhat hot start has made its stock more expensive than its cruise line peers, I am willing to pay up for this one, because I think it's going to be a winner," he said.
Cramer highlighted Viking’s unique selling points, such as its ships not having casinos and being adults-only, as well as its focus on affluent customers and niche destinations. He believes these factors give Viking a competitive edge.
"Viking's got a cleaner balance sheet than its peers, differentiated brand, it caters exclusively to high-end customers … part of the business I expect to hold up better than the mass market side of things," he said.
Despite Viking’s preliminary first-quarter results showing a slowdown in growth since the pandemic, Cramer remains optimistic about its future. He acknowledged that Viking’s balance sheet isn’t perfect, but he sees it as a better option compared to other publicly traded cruise lines.
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He suggested that investors buy Viking stock at its current price, even though he would prefer it to be more in line with its peers, which he estimates to be around $20. Cramer believes Viking’s unique business model and target audience justify its premium valuation.
Why It Matters: Viking’s IPO comes at a time of optimism for the stock market. In March, Bank of America’s technical strategist, Stephen Suttmeier, predicted that the S&P 500 could surge by 34% by the end of 2026, with no end in sight for the secular bull rally.
Moreover, the cruise industry has been innovating to attract new customers. For instance, Virgin Voyages recently introduced a month-long cruise package specifically designed for remote workers, combining work and travel in an unprecedented way.
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