The shares of happier exhibitors, AMC Entertainment, continued on an upward trajectory fueled by retail traders on Reddit chat rooms on Monday, even as a leading Wall Street analyst demoted the stock to the “ sell ” and valued it at $ 1.
“In our opinion, the recent volatility and surge in the company’s shares, thanks to the Reddit / WallStreetBets crowd, has decoupled AMC’s stock price and valuation. The prospect of near-term bankruptcy has been averted thanks to $ 1.2 billion in new capital raised since mid-December. However, shareholders have been diluted by about 75% in the past two months and there is still about $ 5.7 billion in debt, a total that is increasing each quarter due to deferred interest payments, ”writes Eric Handler of MKM Partners.
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Dilution refers to millions of newly issued AMC shares, including Silver Lake Partners, which last week traded its AMC bonds for stocks and then cashed in amid the #SaveAMC buying frenzy. Handler and others believe that AMC is likely to explore an additional stock offering due to its high stock price – and who could blame it?
GameStop and other targeted actions on Reddit have also exploded in a sudden disruption of the traditional investment ecosystem by retail traders. (The erosion of GameStop’s business model and the skyrocketing of stocks were ridiculed Saturday on SNL.) The action, which targets stocks with heavy short positions, mostly takes place on e-commerce platforms like Robin Hood, who was all the rage last week by limiting transactions.
AMC is up nearly 6% to $ 14 in midday trading. GameStop – whose shares rose from $ 2.57 to a high of $ 483 – is down 25% to $ 244.
Meanwhile, scared commentators on Monday attributed a sharp rise in the price of silver to Reddit’s ‘army’, which they say is now thriving in commodities – something some have denied and even ridiculed. by some on Wall Street Bets.
“Guys do NOT listen to people who trick you into buying money. The media is coordinating a situation to distract us all from GME $ and AMC%, ”a WSB post said, accusing the mainstream media and investors of throwing names that no one on Reddit actually buys. . “Iv read stuff all weekend about how R / WSB IS in this stock and in this and that at least 5 different stocks out there trying to get us to hunt and when you go to WSB, not only one is mentioned. “
Others agreed, urging the Reddit community to focus on GameStop and AMC.
“They talk on CNBC like the people at Reddit are really squeezing the money. It’s completely absurd, they practically encourage it, ”said another.
“We are going to be too dispersed, it is important that we unite our strategy in one title at a time. AMC is already on the verge of skyrocketing with 500M in volume ”, we read again (there are thousands of them). Focus on the AMC guys, stop talking about all these other stocks and stand united, if we’re going to screw these hedge investors, that’s the only way to do it. Simply put, the more we buy and own AMC, the more it will grow this week. “
It’s called a populist revolution on Wall Street, but there is little clarity on the ultimate gains or losses that could be suffered by individuals or institutions.
On AMC, Handler wrote, “The emotion behind the #SaveAMC movement could lift stocks higher in the near term, but we believe that this valuation momentum is not sustainable over the long term.
AMC theaters closed in March and sputtered open in the United States and around the world. Stock was crushed as the pandemic persisted, key markets remained closed and studios postponed releases, fueling bankruptcy speculation. Led by CEO Adam Aron, AMC on Jan. 25 announced a major fundraising program to run it through the year as cinema resumes. The title responded, going from a low of under two dollars to five or six – before the Reddit frenzy blew it up to over $ 20.