David Einhorn Says Tech Stocks Are in an ‘Enormous’ Bubble
Bloomberg
Published Oct 28, 2020 01:47
Updated Oct 28, 2020 02:09
(Bloomberg) -- Technology stocks are in an “enormous” bubble, Greenlight Capital’s David Einhorn said in a letter to investors.
“Our working hypothesis, which might be disproven, is that September 2, 2020 was the top and the bubble has already popped,” he wrote in the Oct. 27 note, seen by Bloomberg.
Tech stocks have driven the market’s gain this year. The Nasdaq 100 Index is up 33% since Jan. 1, led by gains in Zoom Video Communications (NASDAQ:ZM) Inc and Tesla (NASDAQ:TSLA) Inc. By contrast, the S&P 500 has risen 5.3%.
Einhorn points to “an IPO mania,” huge market concentration in a small group of stocks or a single sector, extraordinary valuations and “incredible” trading volumes in speculative instruments as signs of a bubble.
As a result, Greenlight has adjusted its short book including adding a fresh bubble basket of mostly “second-tier companies and recent IPOs trading at remarkable valuations,” he wrote.
A spokesman for the firm declined to comment.
©2020 Bloomberg L.P.
Get The App
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.