Investment

How To Invest In AMC And Really Make Long-Term Money – Forbes

Published

3 years ago

August 1, 2021

AMC, the nation’s largest movie theater chain and darling of the meme stock afficionados, has all the hallmarks of a disaster movie: a monster (the pandemic), questionable actions from main characters (the company’s ownership) and skanky fundamentals (too much debt, share-price dilution).

That’s not to mention that fast-growing streaming services are eating into its customer base like acid, and the Delta virus variant could squelch the former multiplex goers’ thoughts about returning.

In any disaster movie, the beleaguered good guys also find the monster’s vulnerability. In The War of the Worlds, H.G. Wells’ classic Martian-invasion book later made into several flicks, the aliens’ weakness is a lack of immunity to our planet’s germs. For AMC and other such troubled companies like GameStop

GME
, it’s the low regard ease with which a mob can take down short seller. A coterie of young folks have a deep distaste for the Wall Street establishment, which failed their parents and their families very badly during the financial crisis some 13 years ago.

Today, that translates into making meme stocks, which stodgy old hedge funds have shorted, into a cause célèbre for Gen Z investors. The young amateur stock jockeys have pumped up these names, sticking it to those smug Wall Street tycoons, who get caught in short squeezes.

Due to the Robinhood crowd’s support, AMC has seen its stock price triple thus far in 2021. That’s despite losing $4.5 billion last year ($1.42 per share) as pandemic-spooked film audiences stayed home, and also logging a $500 million loss in 2021’s first quarter. Second quarter earnings, slated for Aug. 9, are expected to show a narrower loss, just 91 cent per share, per the Zach’s Consensus. In the January-March quarter, attendance had fallen almost 90%, versus the year-earlier period.

The popularity of AMC’s stock has been a boon for the chain, even though the outfit diluted shares a bunch via new stock issued. The company has floated common stock offerings, raising a total of $1.25 billion—cash that it desperately needs in a nasty time like now. Analysts project that the company will be in red ink for at least three more years.

Meanwhile, management, led by CEO Adam Aron, also whittled down net debt to $4.6 billion as of March 31, from $5.4 billion. Plus, it completed a debt-for-stock exchange offer, and extended maturities on $1.7 billion in bonds until 2026. As a result, S&P Global Ratings last month raised AMC’s rating to CCC+ from CCC-. Granted, this is still deep in junk bond territory, but represents a forward step.

The larger question is: Does AMC have a future, or will it dwindle to little or nothing? Think of all the corporate powerhouses of yore, like Eastman Kodak

KODK
or Xerox

XRX
, that time has passed by.

Maybe AMC can avoid that fate. For the near future, AMC likely will consolidate its hold on what remains of the cinema-going public. Many small operations tanked over the past year. Regal Entertainment and Cinemark, its two biggest U.S. competitors, are in a weaker condition, and AMC could end up the last chain standing.

After that, AMC has to bet that people eventually will want to return to the wide-screen auditoriums that, indeed, offer a much richer visual experience than even the largest TVs at home. Going out to the movies has always been a communal undertaking, and like live sports, which are showing a decent comeback, could reclaim their patrons. True, stadium-viewed sporting events offer the extra dramatic element of rooting for the home team. Once Hollywood starts putting out better movies—its pandemic entries have been kind of lame (Tenet, anyone?)—sitting in the dark to watch a blockbuster will have better appeal.

If you agree with that thesis, then when is the right time to purchase AMC shares? One answer is to buy on the dips. In fact, we’re in a dip now: AMC has fallen almost 30% since mid-June, partly owing to the onset of the Delta variant. And odds are that Robinhood gang will tire pf AMC.

At that point, is buying the shares a mad-money play? Sure. Still, look at other pandemic-stricken stocks that are rising anew, like oil companies. That could be enough for a Hollywood ending.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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