AMC and other Meme stocks explode again. What will explode next?
Are memes marketers running out of ironic new choices?
AMC Entertainment Holdings
has just competed in his second crazy race in less than six months. As a rotating native in a digital world, I can’t hope to keep pace with the idle, tax-boosted young capitalists who monetize their ability to quickly spot chat room microtrends in off-radar assets. But if the whole Reddit and Robinhood started recycling old jokes, well, that’s something I know a thing or two about.
All I have to do now is filter the universe from past meme winners to the ones that now look like bargains. Granted, this can be difficult in asset classes that lack cash flow and challenge traditional valuation.
I did some early theoretical work on a Capital ASS coin pricing model, named of course for Australian Shepherd Safe, the cryptocurrency launched in April, whose canine theme is a nod to Dogecoin, which itself is a parody of Bitcoin, and whose cheeky acronym makes it endlessly memorable.
Come to think of it, if old meme swaps return, this might be an idea for investors looking for terrible ideas at discounted prices. ASS recently changed hands to one hundred millionth of a cent, up from over six hundred millionths of a cent last month. Bottom fishing, indeed, and inflation hawks will appreciate that future supply is capped by design at 200 sextillion coins.
The meme trade sequels can be just as action packed as the originals, as AMC (ticker: AMC) has proven. The theater chain started this year at $ 2 a share and rose to $ 20 during the
(GME) frenzy at the end of January. Then it fell to single digits at the end of last month, before exploding to over $ 70 at some point last week. The rise this time, like the last, was related to the posting of punchlines on Reddit, high short-term interest ripe for squeezing, and a high volume of call options.
Read more: AMC stock is up 3.100%. Should we buy or sell?
AMC used the preparation to issue obscene amounts of new stock. There are around 513 million shares today, up from 104 million a year ago. The company has grown roughly 20 times its value during a pandemic that has shut down its theaters, inflated debt, and accelerated Hollywood’s transition to making movies for streaming rather than big screens.
Certainly, the proceeds from those stock sales convert the hype into real-world assets. But if this is a sustainable investment thesis, now is the time to start buying wholesale and swallowing Schlitz to take advantage of the five-cent bottle deposits.
To be clear, the movie industry, although deeply contested, is picking up again day by day. A Quiet Place, Part II raised nearly $ 60 million over Memorial Day weekend – a hit, with or without the pandemic.
Chad Beynon of Macquarie Research, sees “great value” in two theater names,
(IMAX), but not in AMC. He points out that before the pandemic, in 2019, AMC and Cinemark produced similar profits before interest, taxes, depreciation and amortization, or Ebitda, but that AMC recently had 10 times the market value of Cinemark.
(BB) also had its second take-off of the year last week. Like AMC, it fits the theme of traders showing unlikely levels of enthusiasm for the left-behind stocks the establishment has bet against. But what’s the next forgotten memes swap that fun-seekers go clowning in?
Please don’t say Bitcoin. It went from a high of $ 63,000 in April to $ 37,000 recently, but Tesla chief and crypto thought leader Elon Musk tweeted a pair of relationship breakup memes last week that made a veiled reference to Bitcoin. Based on my analysis of the flow of discounted hashtags, this equates to a double downgrade on Wall Street.
Equities with the wrong names have potential, but the blue chip in the group,
(ZTNO), was urged by regulators to change his ticker to ZOOM after jumping too many times in sympathy with
Focus on video communications
(AMCX), the TV problem that has nothing to do with the theater business, is another classic, but it’s too late, it jumped 13% on Friday.
For now, I have an eye on crypto cannabis, non-fungible emoji tokens and celebrity PSPCs, or special-purpose acquisition companies, now that the market has sold out. Basketball’s Shaquille O’Neal is on his second, and Shaq rhymes with SPAC, which, logically speaking, could be a lasting competitive advantage.
UBS investment bank likes package delivery but not boxes, it seems. In a summary last week of its “strongest picks,” the bank predicted that
(FDX) would rise to $ 383 per share, which would be a 27% gain from recent levels, but that
(IP) would slide to $ 44, down 32%.
FedEx is trading at 15 times projected earnings for the next four quarters, and IP, 13 times. Thomas Wadewitz, the FedEx analyst, likes the tight supply and high demand for parcel delivery, suggesting that profit margins will increase next year. In particular, the chaos of the supply chain has left factories and retailers with too little inventory and left a lot of need for business-to-business shipments.
Cleve Rueckert, the intellectual property analyst, estimates that boxboard containerboard is in surplus to a degree that will cause prices to drop 5% next year from this year. Input costs, on the other hand, are increasing. Containerboard factories reopening or under construction could add 7% to supply. As a result of the pandemic e-commerce frenzy, the demand for containerboard will only increase by 1% to 1.5% per year until 2024, Rueckert estimates.
IP relies on containerboard for 80% of EBITDA. China is suspending imports of old American boxes, which could lower the prices of recycled packaging that competes with containerboard.
Whether recycled memes can outperform reused boxes remains to be seen.