Interactive Brokers Founder and Chairman Thomas Peterffy cautioned investors from shorting meme stocks as prices can soar to unimaginable highs before falling to target, CNBC reported.
- Peterffy warned that while it may be tempting to bet against the stocks, investors should resist unless they have liquid resources. Prices could reach “unimaginable highs” before they settle, and investors will have to cover.
- Shares of AMC Entertainment surged over 20% on Monday after rising 83% the past week, as retail investors dove into the stock and squeezed bearish bettors. year-to-date gains are at 2,500% so far.
- The brokerage pioneer said stocks will always approach their fundamental values which in the case of AMC is much lower, in line with views of short sellers in the stock.
- Peterffy said prices will eventually return to their original single-digit value in dollars and bullish bets will lose their money in the long run. Long-term bets are discouraged for the stock.
Peterffy believes it is impossible for AMC prices to hold up at the current levels. AMC is up 20.18%.