'We're running out of new money': 'Big Short' investor Michael Burry explains why meme stocks will crash soon as bandwagoners exhaust the trade

• Michael Burry said a meme-stock crash is coming as fewer people are left to jump on the bandwagon.
• "We probably do not have to wait too long," he told Barron's in an interview.
• Burry, known for predicting the US housing market collapse, has been bearish on meme stocks before.

A crash in meme stocks is coming, Michael Burry said.

Burry, who's known for predicting the US housing-market collapse that precipitated the global financial crisis, told Barron's in an interview that "we probably do not have to wait too long" for meme stocks to crash as retail traders and Wall Street are fully invested in the theme.

"We're running out of new money available to jump on the bandwagon," Burry told Barron's. He likened the market froth to the 1999 dot-com and 2007 housing bubble that people thought would continue and said everyday investors are the most likely to be harmed.

The Scion Asset Management head has made known his bearish view on meme stocks before. In his brief return to Twitter last month, he said, "All hype/speculation is doing is drawing in retail before the mother of all crashes. #FOMO Parabolas don't resolve sideways; When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries. History ain't changed."

Burry, who was portrayed in the film "The Big Short," was once a GameStop bull, paving the way for the meme-stock frenzy to come. His private investment firm bought a stake in the video-game retailer in 2019 and owned 1.7 million shares as of the end of September 2020.

His thesis began to play out as shares rose through the end of 2020. According to regulatory filings, the firm exited its GameStop stake by the end of the year - missing out on the stock's epic rally in January forced by retail traders.

Even if the market has a correction, investors told Insider previously that the horde of retail traders who have joined the stock market amid the pandemic are largely here to stay, though meme stocks could be hit hard.