Billionaire businessman Barry Sternlicht of Starwood Capital issued a dire warning on the market, calling the meme-stock mania and many tech high-flyers signs of a speculative bubble. "You really have two stock markets today. You have the one I grew up on. I went to business school and I learned about discounted cash flows and companies' ability to pay dividends and grow," Sternlicht said Wednesday on CNBC's "Squawk Box." "And then you have a complete casino society. A complete, total speculative bubble, whether it's the meme stocks, even some of the multiples on the tech companies that are impossible to imagine," Sternlicht said. Earlier this year, the meteoric rally in meme stocks such as AMC Entertainment and GameStop sent shockwaves across Wall Street. A band of retail investors who coordinated trades on social media platforms managed to push up share prices of these heavily shorted names to astronomical levels. GameStop is still up more than 800% this year, while AMC has gained a whopping 1,600%. Sternlicht, the chairman and CEO of Starwood Capital, said he sees reminders of the troubling signs before the burst of the dotcom bubble in the 2000s. "The number of companies [are] losing money when their market cap is at an all-time high. There's a lot of warnings signs that we are in the 2000 and 2001 before the Nasdaq dropped 82%," Sternlicht said. The tech-heavy Nasdaq Composite is up more than 12% year to date, sitting about 6% below its record high reached in early September. The benchmark is trading at more than 28 times forward earnings, falling from a multiyear high of 35 times in August 2020, according to FactSet.
Barry Sternlicht, CEO, Starwood Capital Group
Scott Mlyn | CNBC
Billionaire businessman Barry Sternlicht of Starwood Capital issued a dire warning on the market, calling the meme-stock mania and many tech high-flyers signs of a speculative bubble.