Famed “Big Short” Investor Michael Burry is taking aim at Target Corporation TGT.
Why is Burry Nervous: In a June 27 tweet, Burry linked a CNN Article titled "Just keep your returns: Stores weigh paying you not to bring back items," and informed his followers on Target’s inventory problems.
In his tweet, Burry mentions a “supply glut” which is a problem all over the nation. Following 2021’s pent-up consumer demand, many companies believed that the demand would carry over into 2022 and therefore over-ordered inventory.
Yet, due to rising inflation rates and a struggling economy, consumer spending has slowed rather than continue to boom.
Burry believes that supply gluts will lead to disinflation in quarter-three and four of this year. Disinflation will force the Fed to pause interest rate hikes and halt quantitative tightening.
If Burry is right, then eventually the pent-up inventory will start to cost retail companies millions of dollars and stock prices will continue to plummet.
Since the start of 2022, Target stock has lost 38.93% of its value, as of June 29.
Is Burry Right: For now, it seems that Burry is right as retailers have confirmed inventory struggles according to InvestorPlace.
In addition to Target, companies such as Best Buy Co, Inc BBY and Gap, Inc GPS have both expressed struggles with inventory.
Burry has also noted his concern for other companies such as Tesla, Inc TSLA.
All of Burry’s recent comments seem to be focused on a recession, and only time will tell if the economic psychic will be proven correct once again.
Photo: Courtesy of Mike Mozart on flickr
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.