'Big Short' investor Michael Burry compared the meme-stock craze to the dot-com and housing bubbles - and warned of an impending crash
Michael Burrysaid the meme-stock craze reminded him of the dot-com and housing bubbles.
The Big Short" investor predicted the buying frenzy would end in a brutal crash.
- Burry also explained why becoming a meme stock can be a huge boon for a company.
Michael Burry warned the frenzied buying of
"We probably do not have to wait too long, as I believe the retail crowd is fully invested in this theme, and Wall Street has jumped on the coattails," Burry told Barron's in an email. "We're running out of new money available to jump on the bandwagon."
Burry is best known for his billion-dollar bet against the housing bubble in the mid-2000s, which was immortalized in the book and the movie "The Big Short." He also took a stake in
The Scion chief told Barron's that Wall Street professionals are now tracking social-media chatter and cashing in on the latest meme stocks.
"They are in a better position than retail to participate, sniff out and start gamma squeezes in the options market," he said. A "gamma squeeze" refers to buying call options on a stock to force market makers to purchase the underlying shares to hedge themselves, which in turn pushing the stock price up even more.
Burry, who has been warning of an historic market crash for months, also trumpeted the success of his GameStop wager. While he exited the position before the stock skyrocketed in January, he still turned a sizeable profit. "If I get within years of a thesis coming true, I'm happy," he said.
Finally, the investor emphasized that for an ailing business like GameStop or
"This is a Godsend for these companies," Burry told Barron's. Indeed, GameStop went from spending nearly $200 million to repurchase 37% of its outstanding shares in 2019, to raising over $1.6 billion from share sales in the first six months of this year.
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