That’s how Josh Brown, market commentator and CEO of Ritholtz Wealth Management, responded when I told him I was writing about meme stocks in the fall of 2022, his tone one generally reserved for a parent who isn’t mad, just disappointed. “It was fascinating at the time, but it’s way past,” he said, likening covering GameStop today to writing about Soulja Boy and the Macarena. For AMC Entertainment (AMC), the release of its new preferred stock class called APE units has come at a bad time. Competitor Regal Cinemas announced a potential bankruptcy, which caused hysteria in the movie theater industry.
More from InvestorPlace
It’s done an awkward dance to keep its retail investor base engaged but from a distance. It underwent a four-to-one stock split in the summer of 2022 (meaning, if you owned one share for, say, $100, you would then have four shares worth $25 each) to make more shares available and to lower the price of those shares. “The jury is still out about whether they’ll be able to achieve something that is viable long term,” said Nick Colas, co-founder of the markets insight firm DataTrek Research.
“They issued a whole bunch of stock and they raised more than $1.5 billion. It has allowed them to stave off the risk of bankruptcy in the near future. The companies at the center of the saga haven’t been able to let go either. Instead, they’ve been tasked with navigating a landscape where much of the interest in them is based not on fundamentals or financials but instead on inside jokes, winks and nods, and internet vibes. It’s allowed some of them to raise capital and buy time to turn their businesses around.
Fed Rate Cut Could Unleash Stock Rally Just Days From Now
In what can be considered bad timing, AMC released its preferred stock class, called APE units, on Aug. 22. Some investors received APE units in the form of a dividend payout prior to the preferred class actually beginning to trade. Now, the class has officially begun trading, but it won’t be seeing immediate success due to the stock’s current volatility. Since the year began, retail investors have been making their presence known on Wall Street. Even though John and Jane Q. Public have been putting their money to work in the stock market for more than a century, they’ve never rocked the boat quite like they have in 2021. GameStop, which didn’t respond to repeated requests for interviews or comment, hasn’t taken a single question from analysts on its earnings calls since the craze unfolded around it in early 2021.
- As we’ve said numerous times in this space, the worst positioned companies are those with negative cash flows and near-term debt maturities.
- It had a rather atypical set of heroes and villains, though as these things always go, the real story of who was on what side was more complicated.
- In the eyes of apes, AMC’s share price has been manipulated by Wall Street, with hedge fund giant Citadel, headed by billionaire Ken Griffin, taking on the role of chief villain in their story.
- Pretty much the only consistent message you’ll find on Reddit, Twitter, Yahoo!
- Now, he said he has 3.2 million retail shareholders who own 80% of AMC so he’s taken to Twitter to communicate with them.
Many theater fans will return but not enough to support a $41 billion valuation. AMC’s Aron laid out a clear case in early June to authorize the sale of up to 25 million shares of stock, which would occur in 2022. But enough AMC apes expressed concern about the potential for share-based dilution that Aron and the board again scrapped the idea last week. For AMC’s retail investors, who refer to themselves as “apes” — an homage to Rise of the Planet of the Apes, whereby apes are deemed “stronger together” — the company represents a battleground stock where they can stick it to Wall Street. AMC CEO Adam Aron has embraced the retail investors buoying his stock, speaking directly to them—and even offering a free, in-theater popcorn giveaway for shareholders. Perhaps the meme stock craze — and the continued but diminished interest in the companies involved — is nothing more than the Tinkerbell effect.
Sign up for The Big Squeeze newsletter
He sent a letter pushing for changes at the struggling retailer and eventually got three board seats. Months later, Cohen cashed out, making $68 million in the process. The stock plunged, leaving in the lurch many eager investors who had followed the executive into the trade. He was facing a lawsuit, alongside Cohen, alleging they were involved in a pump-and-dump scheme around the stock.
Before GameStop became a meme stock in 2021, there had already been plenty of rumblings about it. Michael Burry, a name you might recognize from The Big Short, revealed a position in the company in 2018. Among retail traders, interest in the company began to grow, with some noting the high level of short interest in the company and others simply believing it was a good investment. For years, a Massachusetts-based man named Keith Gill who went by Roaring Kitty on YouTube and DeepFuckingValue on Reddit beat the drum of a comedy-laced case for the stock.
The 23-Year-Old Army Officer Turned YouTuber Leading The AMC Meme Stock Frenzy
That’s the attraction to it.” And then maybe, once caught up in the moment, you also throw down some money on black, too. If you share our vision, please consider supporting our work by becoming a Vox Member. Your support ensures Vox a stable, independent source of funding to underpin our journalism. If you are not ready to become a Member, even small contributions are meaningful in supporting a sustainable model for journalism. Comedian Ashley Ray on grief, theater camp, and learning to make herself laugh first. Emily Stewart’s column exposes the ways we’re all being squeezed under capitalism.
The ape agenda also requires bringing in new retail investor capital, which would presumably be tougher to do if AMC were even modestly diluting existing shareholders. Nevertheless, the cash flow data is pretty clear that the company is going to need to sell additional shares if it’s to survive for years to come. Since the late January short squeeze, AMC’s ape army has had two separate instances where they genuinely could have saved AMC. Both times, they chose to tie CEO Adam Aron’s hands and favor their own misguided agenda over helping out the company they swore to protect.
Our community is about connecting people through open and thoughtful conversations. We want our readers to share their views and exchange ideas and facts in a safe space. For AMC to have a valuation of $41 billion, or Hometown International, which consists of a single sandwich shop with $35,000 in sales over the last two years, to be valued bittrex review at $100 million, just doesn’t make any sense. This is a temporary phenomenon, and the market will eventually return to some semblance of reality. “Anytime you’ve got the government involved, you’re going to get less of what you want and it’s going to become more expensive,” said Roth. It’s not just me who believes a retail trader retreat is all but inevitable.
It also plans to sell its AMC-branded popcorn outside the theaters at grocery and convenience stores and shopping mall kiosks. Aron wrote in a tweet the company’s new APE units will allow it to “raise capital, pay debt,” and more. That aafx trading review could potentially be enough to keep it afloat while competitors tease bankruptcy. Cineworld, the parent company of Regal Cinemas and the second-largest movie theater circuit in the world, says admission levels are poised to remain low through November of this year. This will put its liquidity in a tough spot and could spark a bankruptcy filing. Here’s the rundown on a rival’s potential bankruptcy and how it could impact AMC in the long term.
So, somebody is going to lose their investment and it will likely be shareholders. It’s become obvious over the last few years that facts don’t matter in politics and now it looks like the same thing is happening in the investment world. Participating in equity markets has always entailed some risk, but historically, if one performed careful research, paying attention to fundamentals, a rational investment strategy could be devised. Not so with meme stocks, the latest monkey wrench thrown into the grooved gears of Wall Street.
Cohen intermittently engages his watchers and fans with cryptic tweets that range from heartfelt to weird to crass. In October, he tweeted a picture of himself with billionaire activist investor Carl Icahn. It sparked suspicion the two might be working on something together, but it wasn’t clear it meant anything at all, which goes for most of Cohen’s tweets. “It’s the same psychology as if you’re in a casino, you walk by the roulette table and you see someone throw down $50,000,” says Matt Kohrs, 26, who runs a competing YouTube channel covering AMC.
It’s also been added to the Russell 2000 Index and will be the top-weighted stock when the index rebalances on June 25. At their size, AMC and its fellow meme stock GameStop GME can now move the index either up or down dramatically in any given day. Consider AMC AMC Entertainment (AMC), which was recently on the verge of bankruptcy, now has a market capitalization (including net debt and lease liabilities) of over $41 billion.