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Cramer: Snap might actually get a summer bump when insiders are finally allowed to sell

  • Insiders who got a crack at the Snap IPO won't sell the stock when the lockup expires, Cramer says.
  • Cramer makes his case by addressing a rare upgrade of shares of the Snapchat parent.

Insiders who got a crack at the Snap IPO at the offer price of $17 per share won't sell the stock when they're finally allowed to later this summer, CNBC's Jim Cramer said Thursday.

Cramer makes his case by addressing a rare upgrade of shares of the Snapchat parent. "Stifel comes out and says the risks to Snap are overstated, and they are relishing the opportunity in this."

"There's a subtle moment … in this call," Cramer argued on "Squawk on the Street." "The implication was, don't fear the lockup expiration as much. A lot of it's done by insiders. I think the next thing that happens is the insiders come out and say, 'We're not selling, not at these prices. If anything, were buyers.' That gets the short squeeze going."

Two lockup periods expire in the coming weeks — the 150-day on July 31 and the 180-day on Aug. 31.

Many insiders are restricted from selling stock for an agreed upon lockup period after the initial public offering. Often lockup expirations lead to a drop in a recent IPO's share price.

Snap shares bounced more than 4 percent after the Stifel call. The stock hit a record low of $15.21 on Wednesday, well below its initial public offering price of $17 per share.

On Monday, Snap closed below the IPO price for the first time.

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