[ad_1]
Billionaire entrepreneur Mark Cuban told CNBC on Tuesday that he believes the Reddit traders who helped trigger the GameStop short squeeze and subsequent stock market surge will remain a force in the market.
“I’ve always been taught, ‘You get long and you get strong,'” Cuban said on “Squawk Alley.” “You go out and create more buyers for your stock and the stock price goes up and that’s exactly what’s going on here, except it’s only WallStreetBets that’s making the ‘get strong’.”
Cuban’s comments came as GameStop shares plunged about 50% on Tuesday to around $ 111 each, a day after losing nearly a third of its value.
The video game retailer’s share – which rose 400% last week, hitting an all-time high of $ 483 per share at one point – has started to soar in response to a short squeeze that occurred when online traders on sites like Reddit’s WallStreetBets forum have invested in heavy betting. – against stock.
Cuban, who made billions of dollars during the dot-com boom, said he believes these online investors have gained valuable knowledge through the short squeeze, as well as the volatility of the dot-com market. cryptocurrency. “I think it’s real,” said “Shark Tank” investor and owner of the NBA’s Dallas Mavericks.
“I think now that they have recognized their power and now that they have learned a few lessons, we are going to learn more, not less,” he added. “It won’t be a set of circumstances where all of these people have lost money, they’ll go home with their tails between their legs and they’ll never do it again.”
Short selling is a strategy in which an investor borrows shares of a company and then sells them quickly, expecting the price to fall in the future. The short seller buys back the stock at its lower price and returns the borrowed stock, taking advantage of the difference.
When the opposite happens, such as when online traders flocked to GameStop, hedge funds and other investors who had shorted the stock may try to minimize their losses by buying stocks at the current higher price. The two groups of investors who buy the stock add to the upside momentum.
Warning
Disclosure: CNBC owns the exclusive off-grid cable rights to “Shark Tank,” on which Mark Cuban is co-host.
[ad_2]
Source link