The Shark Tank investor and owner of the NBA’s Dallas Mavericks, Mark Cuban, has strong notions that the Reddit traders who had helped boost the GameStop short squeeze and led the stock surge shall remain a part of the market.
His interview on Squawk Alley reads, “I always was taught, ‘You get long and you get loud. You get out there and create more buyers for your stock and the stock price goes up and that’s exactly what’s happening here, except its just WallStreetBets that’s doing the ‘getting loud.”
The Billionaire entrepreneur’s comments were right when there was a 50% decline in Gamestop shares to around $111 each unit. This was a day after the shares lost almost one-third of their value.
The stock had surged about 400% last week and had started rallying as a response to the short squeeze. Now, this short squeeze was due to Reddit users from Subreddit, “WallStreetBets” forum took part in the “heavily bet-against name.”
Mark Cuban feels that these online investors have their knowledge of the short squeeze, and how the unstable cryptocurrency market. He feels, “I think now that they’ve recognized their power and now that they’ve learned some lessons, we’re going to get more of it, not less of it.”
He also added that “It’s not going to be a set of circumstances where all these people lost money, they’re going to go home with their tail between their legs and they’re never going to do this again.”
Mark Cuban’s Take on Youngsters Influencing the Downfall of Wallsteet’s Archaic Metrics
According to Mark Cuban, enthusiastic investors of now are youngsters such as Gen Z or the young Millenials. They have the digital resources of researching online and assess valuation from a different mindset. He called this mindset, a result of growing up “with an iPhone their entire lives.”
He says, “They put a premium on items that are digital. The idea that a digital trading card or digital artwork could have more value than something tangible in our minds, or physical, would be inconceivable to many people yet to Gen Z, that’s what makes perfect sense.”
Cuban also suggested that there might be lesser importance of traditional valuation metrics, stating, “When it comes to stocks it’s the same thing.” His statement comes from his perceptive experience of the HODL principle. The HODL or the buy-and-hold mantra is popular among investors in the cryptocurrency market.
His perception of younger investors is that their varied approach to the market has brought about crucial changes. He feels that the strategies of yesteryears, such as the HODL, have “worked for a period.” Hence, he had stated that “Maybe bitcoin, ethereum, etc. will go down again but at the same time, we’re starting to see the evolution of applications on the blockchain that are really starting to build marketplaces. I think younger kids, Gen Z in particular, maybe younger millennials have a different approach to how they look at stores of value, how they look at how assets are priced than we looked at traditionally.”
Marl Cuban’s Complaint on Why Robinhood and SEC Did Not Warn About the Trading Limits
Mark Cuban believes that SEC and Robinhood should have warned investors last week about putting trading limits. They had applied the trading limits on GameStop and other “heavily shorted” stocks. The trading limits led to a 44% decline in Gamestop shares.
The Robinhood CEO, Vlad Tenev, later responded stating that these implementations were to, “protect the firm and protect our customers.”. He also mentioned that this was following capital requirements compliance.
Cuban believes that “What Robinhood could’ve, should’ve done is say to them, ‘Look, guys. We have capital constraints and oh, my God, we are getting blown away by all of this. We are going to have to restrict. The SEC should’ve been out there saying the exact same thing.”