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Entrepreneur Mark Cuban stated that technology companies like Apple Inc. and Google parent Alphabet Inc. are currently trading as “meme stocks” driven by “perceived value” rather than financial fundamentals. Cuban made these remarks during an interview with host Steven Bartlett.
The ‘Meme Stock’ Market
Discussing the current market, Cuban expressed his belief that the market is in a bubble, noting it differs from the dot-com crash. “I think we’re in a bubble, but not the same as the internet bubble back in 2001,” Cuban stated.
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He attributed this to current trading behavior. “I think what’s different now is everything’s a meme stock,” Cuban told Steven Bartlett in The Diary Of A CEO podcast.
“Bitcoin is a meme stock, right? Micron Technology Inc., you know, pick Google, Apple, they’re meme stocks.”
Trading Like Collectibles
Cuban explained his assessment stems from observing disproportionate market reactions to minor news. According to the investor, “a company might miss earnings by a penny or only beat by a penny, and their stock will be down 18%.”
He argued these rapid fluctuations do not reflect reality. “The intrinsic value of that company hasn’t changed 18%,” Cuban said, noting traders react to “anticipated information as opposed to the net present value of the future cash flows.”
Cuban argued investors are treating corporate equity like collectibles. “We’re trading them like baseball cards,” he said. “You know, there’s no intrinsic value to this. It’s just perceived value. And what do you think somebody else will pay for it? And I think we’re in a bubble for that real very reason.”
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Surviving the Bubble
Despite his concerns, Cuban noted some companies will ultimately survive, citing precedents from the early internet era. “Look at Dell Technologies Inc. and Amazon.com Inc.. They were companies whose stocks went from way up high, got crushed when the internet bubble burst,” Cuban stated.
He pointed out that Amazon was “losing money hand over foot,” but added, “Now they’re worth trillions of dollars, and if you would just stick it out with them. So, there will be winners.”
