Goldman Sachs Chairman and CEO David Solomon told CNBC on Tuesday that he’s concerned about the intense demand from retail investors in recent initial public offerings.
“I do think we’re in a moment in time where there’s a lot of euphoria. I personally am concerned about that,” Solomon said on “Squawk Box.” “I don’t think in the long run that’s healthy. I think it will rebalance over time, as it always does.”
DoorDash closed its first trading day last Wednesday higher by more than 85%. Goldman Sachs and JPMorgan were the lead underwriters for the food delivery app’s IPO. Airbnb soared more than 112% the following day. Morgan Stanley and Goldman Sachs were lead underwriters for the home-rental platform’s offering.
Solomon isn’t the only one to express concern about the first-day price action for newly public companies. On Friday, CNBC’s Jim Cramer criticized investment banks for not appropriately factoring in the “new cohort” of younger investors as they priced IPOs. “I don’t want to say that the market is broken, but the process of how we’re doing these deals is definitely broken,” the “Mad Money” host said.
Despite his “euphoria” concerns, Solomon, whose company makes money helping companies go public, told CNBC on Tuesday. “There’s a lot of great companies that really have extraordinary growth prospects that are going to continue to come to market.”