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Leon Cooperman told CNBC on Thursday that he believes the Reddit-fueled commercial frenzy involving GameStop actions will end badly. However, the billionaire investor has said he does not blame the people who launched the epic short squeeze, which has taken the action to sky-high heights in recent days.
“I’m not blaming them. I’m just saying in my experience, it will end in tears,” Cooperman said in “Fast Money: Halftime Report,” as the struggling video game retailer’s shares plummeted. ‘about 25%. Earlier in the session, GameStop stock hit an all-time high of $ 483, but came under pressure as many retail brokers placed limits on transactions.
Cooperman said he didn’t have a job with GameStop. However, after a quick glance at the financial data, he said the company’s decline in sales does not support such high levels in the current stock price or anything close to it.
“GameStop is not worth $ 500, not worth $ 400, not worth $ 300, not worth $ 200, not even worth $ 100, not even worth $ 50,” said Cooperman, president of Omega Family Office. He added that “investors” don’t own GameStop – only “speculators” do.
Cooperman said he believed the current moment in the stock market – including the online hype that was pushing heavily shorted stocks up – is the result of many factors, including near zero interest rates. instituted by the Federal Reserve in response to the coronavirus pandemic. He also said congressional tax response played a role.
“Everything is interconnected,” said Cooperman, the son of a Bronx plumber who later became one of Wall Street’s most successful investors. “The reason the market is doing what it is doing is that people are sitting at home, getting their checks from the government, basically trading with no commission or interest rate. I’m not saying they’re stupid. I’m a guy with a good record regularly, and I’ll show you a smart guy. “
Cooperman last week warned of “euphoria” in parts of the stock market. GameStop shares were trading for under $ 50 on the day of Cooperman’s remarks.
“I’ve been through cycles like this in the past. It’s extreme, more so, but that too will pass,” the hedge fund pioneer said Thursday. For example, he noted that Cisco Systems shares hit valuations during the dot-com boom that far outpaced the company’s sales and have yet to recover to that time high, even around two decades ago. later.
“Ultimately, the stock market reflects economic progress or the lack thereof,” he said, while adding that “water seeks its own level.”
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