Analysts from the sell-side are starting to issue warnings as well. After an injury forced him to stop long-distance running, he found himself with more free time. A buddy had already caught the day-trading bug and passed it along to Collins. Rod Alzmann, one of the early winners in GameStop’s run, started researching and seriously investing in GameStock in 2017 and ran a website dedicated to doing research on the company and making the bullish case for it. He cashed out in January 2021, not when GameStop was at its peak but when it had gone up enough to deliver him what he says is some $2 million.
The apes’ agenda is all that matters to apes, and that’s bad news for Aron
- After an injury forced him to stop long-distance running, he found himself with more free time.
- 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.
- These groups seem to be acting in concert to manipulate the market by forcing short sellers to cover their resulting losses.
- Per The Wall Street Journal, the median price target on AMC stock is $5 per share, while the high price target is just $16 per share.
- It turns out investing based on hype and vibes doesn’t really pay off.
He’s gotten rich, quickly, turning $8,000 in savings last December into roughly $1 million today through trading AMC stock and options. You see, at the start of 2021, a handful of stocks gained a cult-like following online. Part of their strategy involved orchestrating a “short squeeze” against big funds that were betting against the stocks by shorting them. There are some companies that are meme stocks, which might be interesting opportunities.
Finances are so personal, and society tells us losses of any kind are deeply embarrassing. Loss aversion is what makes us feel the pain of losing more than the joy of our wins. Not something many people want to put out there publicly — on Reddit, the people posting about their Ls are generally anonymous. While I heard from some investors and their family members about experiencing big losses during the meme stock saga, none wanted to talk on the record. Coupled with its falling short interest — down to 18.5% of float from 19% last month — a collapse in price may not be imminent.
The company has said the claims are without merit; Bed Bath & Beyond did not respond to requests for comment for this story. In certain online communities, individual investors post all sorts of theories about when and mercatox review how this might go down. GameStop investors have taken to directly registering their shares to try to keep them away from brokers and market makers who lend them out to investors who want to short a company. It’s not clear whether the activity will mean anything for the companies or, even in the short term, for the stocks. I listened to AMC’s first quarter investor call where Adam Aron, the CEO, talked about how investor relations weren’t a big deal in the past.
AMC’s « Apes » Care About Their Agenda, Not the Company
At this point, apes have demonstrated on message boards and via YouTube that they’re willing to support a misinformation campaign if it’ll help their agenda. For example, they continue to put forward the incorrect assertion that hedge fund short-selling bankrupts companies, all while ignoring the tangible reasons an underlying business might be struggling. By misinforming others about the culpability of institutional short-selling, apes are trying to lure new investors to what’s effectively become a pump-and-dump scheme. Many of the bigger-name individual investors involved in the meme stock frenzy early have moved on.
But for most, it seems like just a matter of luck as was the case with AMC. As a meme stock, even though its fundamentals were terrible, management was able to issue new stock and dramatically bdswiss review boost shares outstanding. Like a self-fulfilling prophesy, it was nearly bankrupt and then people bid it up like crazy, allowing management to sell more stock and all of a sudden, it has $2 billion of cash and the crisis is over.
In March, AMC filed proxy paperwork with the Securities and Exchange Commission that would have effectively allowed it to double its authorized share count to about 1.02 billion. The proxy vote was to allow for the issuance of up to 500 million shares. To be clear, this didn’t mean AMC was going to issue 500 million shares, or that the issuance would have occurred all at once. It was merely designed to give Aron and the board the flexibility to issue stock to raise capital, should it be needed. There have been plenty of attempts to ascribe meaning to the meme stock (and meme coin) phenomenon over the past several months. Perhaps the correct view is that it was largely meaningless — a strange, exhilarating, and fun thing that happened (until it wasn’t, for some people) that doesn’t signify anything bigger at all.
Meme Stocks to Buy on the Dip: August 2024
AMC was also dealing with a steady decline in movie ticket sales for nearly two decades prior to the pandemic, and management had extended the balance sheet by purchasing other theaters, as well. It’s now sitting on more than $5.4 billion in debt that, according to the 2027 bond prices, bondholders aren’t sure the company can pay back. In March 2022, Cohen revealed a major stake in Bed Bath & Beyond.
AMC’s ‘ape army’ is fighting for free-market capitalism, says former investment banker
It turns out investing based on hype and vibes doesn’t really pay off.
That may allow the company to avoid bankruptcy, but original shareholders have been diluted heavily and the company still has negative cash flows. Even in a peak year before Covid, AMC had less than $1 billion in free cash flow which compares unfavorably with its current $41 billion valuation. Pretty much the only consistent message you’ll find on Reddit, Twitter, Yahoo! These folks are so concerned with the idea that new shares being issued could disrupt their squeeze that they continue to deny AMC’s CEO his wish for improved financial flexibility. Last year, and in early January, before retail investors were able to effect a short squeeze in AMC, the company was forced to issue hundreds of millions of shares of new stock, along with debt that sported a double-digit percentage interest rate, to survive. The capital these share sales and debt issuances raised is what ultimately spared AMC from filing for bankruptcy.
Gill, a.k.a. Roaring Kitty — the financial wellness educator responsible for driving much of the pro-GameStop narrative — has stepped away from the spotlight. He and others involved in the GameStop saga testified before Congress about the matter in February 2021, at which time he proclaimed, “I still like the stock.” He hasn’t posted on his YouTube channel or under his Reddit name since April 2021. Per The Wall Street Journal, the median price target on AMC stock is $5 per share, while the high price target is just $16 per share. Compared to the current share price, these targets are much more reflective of AMC’s underlying value, where heavy shareholder dilution has outweighed the benefits stemming from the company cleaning up its balance sheet.
It’s just as sinister as the old penny stock “pump and dump” schemes where boiler room operators would cold call to bump up a stock price and then quickly cash out leaving suckers holding the bag. The underlying principle is the same, it’s just a lot easier to do now. Certainly, none of this frenetic activity has anything to do with fundamentals. For one, the pandemic ravaged its operations, and it’s still burning through quite a lot of cash.
If enough people clap hard enough, believe hard enough, there’s value in that. But belief in a stock will only get you so far, whether you’re the investor or the company, whether you’re in it for the joke or not. “Preferred just means when the company goes bankrupt and liquidates and pays off its creditors — whatever’s left, the preferred shareholders get first dibs on it. “The market doesn’t quite get it at all, and they’re bidding down the preferred, but they’re all going to go down together.” In other words, it appears neither AMC shares nor APE shares are a particularly good investment.
The dust has since largely settled, with the influence of retail investors fading as markets have faltered. Many traders whose attention was piqued in the earlier days of the pandemic have moved on. It’s getting so there are new examples everyday where an online group agrees to target a stock and drives it up to absurd levels before it drops 20-30% or more in a few hours. It seems that participants in these online forums are posting notes with suggestions like “let’s drive up [insert company name] today” and then it happens. These groups seem to be acting in concert to manipulate the market by forcing short sellers to cover their resulting losses.
