Famed “Big Short” Investor Michael Burry is taking aim at Target Corporation (NYSE:TGT).
Why is Burry Nervous: In a June 27 tweet, Burry linked a CNN Article titled "Just keep your returns: Stores weigh paying you not to bring back items," and informed his followers on Target’s inventory problems.
In his tweet, Burry mentions a “supply glut” which is a problem all over the nation. Following 2021’s pent-up consumer demand, many companies believed that the demand would carry over into 2022 and therefore over-ordered inventory.
Yet, due to rising inflation rates and a struggling economy, consumer spending has slowed rather than continue to boom.
Burry believes that supply gluts will lead to disinflation in quarter-three and four of this year. Disinflation will force the Fed to pause interest rate hikes and halt quantitative tightening.
If Burry is right, then eventually the pent-up inventory will start to cost retail companies millions of dollars and stock prices will continue to plummet.
Since the start of 2022, Target stock has lost 38.93% of its value, as of June 29.
Also Read: Tesla Bear Michael Burry Predicts Divided Labor Market Amid Inflation, Worker Crunch Woes
Is Burry Right: For now, it seems that Burry is right as retailers have confirmed inventory struggles according to InvestorPlace.
In addition to Target, companies such as Best Buy Co, Inc (NYSE:BBY) and Gap, Inc (NYSE:GPS) have both expressed struggles with inventory.
Burry has also noted his concern for other companies such as Tesla, Inc (NASDAQ:TSLA).
All of Burry’s recent comments seem to be focused on a recession, and only time will tell if the economic psychic will be proven correct once again.
Photo: Courtesy of Mike Mozart on flickr
