Interactive Brokers founder: Don't short AMC, meme stocks — they can soar to 'unimaginable highs'

"It is extremely tempting to short these stocks, but unless you have huge liquid resources, please try to resist the temptation because these prices can go to unimaginable highs before they settle down to a reasonable valuation, and you may have to cover on the high point," the online brokerage pioneer said in an interview on CNBC'sShares of AMC soared more than 20% on Monday after rising 83% last week alone despite declines on Thursday and Friday.

"On the long term, stocks always approach their fundamental values, which in this case is much, much lower," Peterffy said, acknowledging that's why short-sellers see an opportunity in certain stocks such as AMC that have soared in price after becoming favored by Reddit traders. Shorting a stock is a bearish strategy in which an investor borrows shares and then promptly sell them, expecting the price to fall. When that happens, the short-seller buys back the stock at its lower level and returns the borrowed number of shares, profiting off the difference. If the opposite transpires, a short may try to limit their losses by buying back the stock at higher prices.

memestocks NakedShorts

“Unimaginable heights..” thank you. AMCSqueeze

CNBC SLIP ADMITS NAKED SHORTS EXIST IN AMC STOCK!!! They continue to support the Hedge funds and spread FUD AMC $AMC $GME TradesTrey matt_kohrs Joshuajammes CEOAdam business MarketWatch SquawkCNBC zerohedge S3Partners ihors3 Reuters

Diamond handed Apes 🦍 rule lmao 😆 AMCTheatres

You con’t to sound more unprofessional & uneducated with your questioning! You’re basically trying to get someone to say retail investors (Hard-working people globally) are pretty much dumb investors?!

Lol. Warn going against it, instead of talking about what actually this sort of crap brings to markets perception and warning against looking at these kinds of investments! Friggin clowns u all are lol. Oh, unless ure all in and pumping the stock-oh wait, that would be illegal!

Thomas Peterffy chuckled at the leading unsophisticated investor question. It's funny to see CNBC legit had a meeting beforehand talking about ways to try and get a 'gotcha' headline.

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