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Can GameStop Short Squeeze Bring Down The Market? What The Experts Are Saying

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Can GameStop Short Squeeze Bring Down The Market? What The Experts Are Saying

Short squeeze in GameStop Corp (NYSE: GME) and others like the clothing retailer Express, Inc (NYSE: EXPR) has seen a frenzy of late due to internet message boards, but is it possible that such volatility may end very badly for the wider market? Analysts and experts are presenting a mixed picture.

Blast From The Past: BTIG Head of Equity and Derivative Strategy Julian Emanuel said the present situation is reminiscent of the tech bubble crash in 2000, CNBC reported.

“We don’t see any signs yet, concrete signs, of a medium term trading top, but this type of volatility leads us to believe that similar to 1999 to 2000, you could get a 10% to 15% pullback at any time,” said Emanuel.

Head Scratching Experts: Surging stocks of AMC Entertainment Holdings, Inc (NYSE: AMC), Bed Bath & Beyond Inc (NYSE: BBBY), and even those swept in the wave like Nordstrom, Inc (NYSE: JWN), are perplexing experts. 

See Also: Why AMC Shares Spiked 40% Today

Scott Redler, a partner at the online financial media network T3live.com, said that the internet frenzy is targeting “names that are most shorted, to create one last squeeze,” as per CNBC.

“There’s definitely some excessiveness out there right now, which has some professionals scratching their heads,” said Redler.

David Wagner, portfolio manager at Aptus Capital Advisors said, “I would have bet my first-born male that GameStop would not be trading at the levels it’s trading at now,” Bloomberg reported.

Gambling and Investing: Loop Capital analyst Anthony Chukumba had a warning for retail investors on GameStop, according to Yahoo Finance. 

“If you want to gamble, go to the casinos. This is not what the markets are for.”

See also: 'Peak Stupidity': The End Of The GameStop Short Squeeze Trade?

“It blurs the line between gambling and investing,” said Greg Taylor, chief investment officer at Purpose Investments, according to Bloomberg.

“When you’re divorcing fundamentals from where stocks are trading, you can do that as long as you’re on the right side of the trade. But when the trends change, you have to get off fast,” said Taylor.

Ignore The Sideshow: Former hedge fund manager and CNBC host Jim Cramer said while short squeezes are “entertaining” they are not enough to bring down the market.

“This stuff is ultimately a sideshow, At the end of the day, I don’t think a Reddit forum can bring the house down,” said Cramer, CNBC reported separately.

“With the exception of a handful of gigantic tech plays, there isn’t a stock out there that’s big enough to bring down this market.”

Cramer’s take comes ahead of the earnings release of titans such as Apple Inc (NASDAQ: AAPL), Tesla Inc (NASDAQ: TSLA), and Johnson & Johnson (NYSE: JNJ) this week.

Photo courtesy: EPIC via Wikimedia

 

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