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“Our working hypothesis, which might be disproven, is that September 2, 2020 was the top and the bubble has already popped,” he wrote in the Oct. 27 note, seen by Bloomberg.
Tech stocks have driven the market’s gain this year. The Nasdaq 100 Index is up 33% since Jan. 1, led by gains in Zoom Video Communications (NASDAQ:ZM) Inc and Tesla (NASDAQ:TSLA) Inc. By contrast, the S&P 500 has risen 5.3%.
Einhorn points to “an IPO mania,” huge market concentration in a small group of stocks or a single sector, extraordinary valuations and “incredible” trading volumes in speculative instruments as signs of a bubble.
As a result, Greenlight has adjusted its short book including adding a fresh bubble basket of mostly “second-tier companies and recent IPOs trading at remarkable valuations,” he wrote.
A spokesman for the firm declined to comment.
©2020 Bloomberg L.P.
