AMC stock explains Reddit users unleashed Wall Street madness - When it seemed that the phenomenon of the actions of the AMC cinema chain had come to an end after the meteoric takeoff they made during the month of January, as a result of the events generated by the WallStreetBets forum of Reddit, a renewed crack of investor appetite has flourished again.

The titles of the cinema chain have accumulated a rally in the markets above 1,600% since the beginning of the year conquering highs after historic highs. That yes, with an impasse period that was gestated on January 27, when the value came to plummet to more than 60%. At which point it was thought that all the rage was over. But the passage of time ended up proving otherwise.

The value dropped in the last day, of course, 20.4% to 51.34 dollars. A setback that does not influence at all the trend that has accumulated in recent weeks.

The result, in short, is that the company has managed to reach a market capitalization of more than 28,000 million dollars accumulating an average trading volume since the beginning of the year of 86,939,211 transactions.

To put this retail fever into perspective, on June 1 the company monopolized a volume of operations of 508,694,618. To put it in perspective, Apple, Wall Street's largest capitalization firm, amassed 67,637,118 transactions in the markets on the same day. 8 times less.

AMC stock explains Reddit users unleashed Wall Street madness

"This is the rebirth of the retailer; the ‘meme stock 2.0’", says in a note Steve Sosnick, chief strategist of Interactive Brokers.

The strongest take-off in the markets came at the end of May and picked up more momentum starting on May 28, just as hedge fund Mudrick Capital Management LP sold a $ 230 million stake in the company for profit shortly after acquiring it, saying the shares were overvalued.

That reawakened the spirits of the community of small investors of Reddit, who coordinated on understanding that the fund had decided to leave the company having difficulty getting rid of its bearish positions. Short positions that exceeded 21% at the end of last month.

AMC stock explains Reddit users unleashed Wall Street madness

Its top investor, Dalian Wanda, had also announced that it had disposed of all of its securities, in addition to leaving the company and its shareholders ' meeting. Another reason why the Reddit threads were heated by putting the value on free rise in an uncontrolled way.

” People have learned what tactics work in these crazy circumstances and are using a strategy similar to previous situations, " Sosnick says.

” There is a retail fanaticism with these stocks right now, " MKM Partners analyst Eric Handler, who has a sell rating and a 1 dollar target price for AMC stocks, states in a note. ” There's a big disconnect between what value is doing and what fundamentals look like, " he adds.

But beyond this type of analysis, it is necessary to gauge how the impact of this brilliant movement has been on the AMC stock exchange. Especially, if a comparison is established with other so-called’ meme stock ' or even with the large technological values that accumulate the largest trading volumes.

Although comparisons are often odious, the results cannot be more striking.

AMC stock explains Reddit users unleashed Wall Street madness

For example, the pronounced upward trend in the titles of the American cinema chain contrasts with the behavior of audiovisual companies from January 1, 2021 to June 1. In that stretch, AMC shares rose 1,500%.

What is relevant comes when analyzing the behavior of the titles of Netflix, Disney, AT&T, Comcast and Viacom: competitors both in the film sector, as well as players who, in part, threaten future attendance to cinemas by the greater promotion of streaming.

In this sense, in the same period Netflix titles fell more than 4%, Disney and AT&T titles took off by 13%, and Viacom titles rebounded by 16%. All, light years from the titles of AMC, which highlights the entity of the rally that has been brewing.

AMC has been at the center of the small investors ' map in recent dates when considering the trading volume of the securities preferred by WallStreetBets: GameStop, Rocket, Nokia and BlackBerry.

AMC stock explains Reddit users unleashed Wall Street madness: And not only that. The volume of operations on their peaks are well above that marked GameStop, which was the company that garnered more headlines during the month of January, as a result of his fierce rally and of the financial hole in which to put multiple hedge funds, as was the case of Melvin Capital, who were forced to make an uprising forced short.

The data reveal that AMC has excelled since the beginning of 2021 in number of total transactions, at the same time that it has positioned itself as the current company that accumulates a higher percentage of trading volume compared to the rest of the ‘meme stock’.

The charts show this overwhelming trend of the cinema chain in the markets. Above all, because of how it has generated enormous interest from investors both in number and percentage.

In fact, as of June 1, AMC showed a growth in its trading volume of 1,602%, compared to the 2.9% decline of GameStop, the 48% rebound of Rocket, the 3% decline of BlackBerry and the 686% increase of Nokia. The cards are on the table and the current preferences are crystal clear.

AMC stock explains Reddit users unleashed Wall Street madness: However, the results are even more illuminating when comparing AMC's trading volume against Silicon Valley's big tech companies. So much so that the interest in the Leawood-based firm-based on that volume captured - has been above that generated by companies with gigantic market capitalization such as Amazon, Google, Facebook and Netflix, and has only been surpassed by Apple in some sections of this year.

On June 1 alone (508,694,618 trades on the stock exchange), it accumulated more volume than Apple, Amazon, Google, Facebook and Netflix combined (85,483,525 trades). A fact that explains why AMC's stellar jump on the New York parquet.

The same applies to companies competing in the audiovisual sector.

In terms of trading volume only AT&T and Viacom exceeded AMC data by 5 points in 2021. On the contrary, the tone has been quite similar over the months.

The combined sum of transactions by investors on June 1 of AT&T, Viacom, Disney, Netflix and Comcast was 72,591,071. Again, below AMC 508,694,618. An overwhelming reality.

AMC stock explains Reddit users unleashed Wall Street madness: This push by investors has a lot to do with the denial by them that cinemas have to close their doors definitively once the pandemic is overcome. It is an activity with which they feel identified and that they want to recover.

Perhaps it is a type of business that will go through another period of consolidation, which can usher in another golden age of returns. A large part of those profits reaped by AMC in the markets also came from the hand of the new capital raised so that the company could go on the offensive, acquiring missing chains.

After all, monopolies can be good for stock profitability.

If AMC can increase market share and box office sales in the United States return to 2018 levels in a few years, total revenues could be estimated at 9 billion, 6 billion for tickets and 3 billion concessions, according to Barron's.Revenues in 2018 amounted to 5.5 billion.

AMC stock explains Reddit users unleashed Wall Street madness: Then, with an improvement in gross margins, AMC could generate $ 600 million in cash flow annually. That would have put the share at a return on cash flow, based on current quote levels, around 4%. The S & P 500 trades at a cash flow return of approximately 3.4%.

Of course, the US publication exposes that there are some problems with respect to this scenario of a cash flow of 600 million. It is more about justifying current valuations than predicting what is likely.

In addition, with mergers and acquisitions, AMC's market shares could increase, but there are still competitors. Regal Cinemas is still on stage as is Cinemark. There is no real monopoly.

Time will put things in place, although, for the moment, interest in the company is only growing exponentially.

# AMC stock explains Reddit users unleashed Wall Street madness #