“Shark Tank” investor Mark Cuban believes the market is overvalued as coronavirus induced uncertainty over consumer spending persists.
The Missing Demand
Attired in a Dallas Mavericks t-shirt, Cuban told CNBC’s “Closing Bell” program that the stock market is overvalued.
“I think it’s almost impossible to predict where the consumer and corporate demand is going to come from,” adding, “It’s hard to create a valuation for businesses.”
Highlighting the missing demand, he said, “We’ve got a problem, we are not working from a foundation of data, we’re guessing, what we are missing is consumer demand. If businesses were able to fulfill demand, they’d find ways to open, but it’s not just about physically opening locations, its that consumers don’t feel confident to spend money right now.”
The Mavericks owner called for the stimulus that addressed demand directly by providing funds to consumers in the form of debit cards.
Market Valuation Uncertainty
Cuban disclosed that he is an investor in both Netflix Inc. (NASDAQ: NFLX) and Amazon Inc. (NASDAQ: AMZN), with both stocks having gained considerably during the pandemic as demand for their services grows.
However, he believes that business has been "fundamentally changed” due to the resultant health crisis of COVID-19, which makes it difficult to value the market. Last month, he had questioned market valuations and disclosed that he was “trying to get more cash.”
Catch-22 For Small Businesses
When a “Closing Bell” host asked Cuban if he thought small businesses were getting the funding they needed through the Paycheck Protection Program, he answered, “No, its the exact opposite they don’t know how to use it. There are companies that are choosing not to take it due to the rules associated with that.”
Cuban explained that small businesses were in a catch 22 situation at the moment, “On one hand they would like to open up but in some cases — municipalities, states, counties, whatever are keeping them from opening, but even if they are able to open, they are not able to get their employees to come back, because [employees] are making more from unemployment.”
Make White House Standard The National Standard
Taking a dig at the Trump administration, the billionaire said his basketball team would follow the White House Protocol in reopening. “If we feel certain we can protect our employees like the White House does, then we will open up our practice facilities and push to go to work, but we’re not there yet,” said Cuban.
Image Credit: Screenshot of News Stream.