Sorry if this DD sucks ass and leads a bunch of people to ditch $AMC. Just focus on the future, and think about the mind of the consumer. Most of that shit they teach in business school is bullshit is trash. Trust me.
? I will return to that a bit later in this DD. Here's another take based on fundamentals on why you might consider $AMC at ~$13/share one of the great value investment opportunities of our time. Bear with me as I, too, am just a retard like some of the readers here. ? Let's begin with the basic asymmetries in a macroeconomic context:
Market Cap (MC): 427.869 M
Enterprise Value (EV): 11.349 B
When seeing that figure, you might wonder if you don't know shit, why might a company have an enterprise value so much greater than its Market Cap. A Company's EV is the total debt + market cap - cash on hand. As you may have heard in the recent news, nobody is having trouble getting access to cash. So then, why might that figure be significant at all if it is practically just about how much the company owes + aggregate value of the stonk. Well, my father used to say, the price of a product is what someone is willing to pay for it. If someone wanted to buy or takeover AMC, they need to pay around 11.349 B. In a few months, I anticipate that number to be so much higher.
The main reason I think $AMC dropped so low and generated so much short seller risk to begin with is the fact that there was a bankruptcy risk. That risk has been wholly eliminated, though I never saw it.
As we find ourselves in a cash flush world where at least 18 Trillion in debt is negative yielding (mostly bonds), we should expect a company with so many assets and a previously healthy balance sheet like AMC to be have access to some of it. The rising stonk price even incentivized Silverlake to convert their debt to shares and sell them (silly bankers). ?
At the same time, the all-star CEO boomer Adam Aron himself grabbed an additional $304.8 M in cash through a direct listing initiated on Monday. I don't know why he couldn't wait until Wednesday to initiate because it would've been over $1B. I trust his judgement. Boomers are more experienced and have steady hands. At the same time, Aron beat back the well known short selling smuts known as Apollo Global Management as they attempted to force bankruptcy on AMC. ?
The confluence of these factors (EV, Access to Liquidity, Stellar Executive Team) and the four I outline below, lead me to believe that even Stevie Wonder can see that this stock is obviously worth at least $30/share.
? ?
The undisputed market leader in theaters.
1,0004 Theatres worldwide
Many auditoriums at AMC locations, often holding over more than one auditorium, seat over 400 people.
They posted 5.47 million in revenues. Auditoriums were rarely at capacity.
8,043 screens/auditoriums.
They will all be packed when opened back up.
Tons of really great movies were held anticipating the end of the lockdown and the re-opening of the movies. Keep this in mind. This is critical to the fundamental analysis and related to the subsequent points.
Margins are ok but especially good on the snacks. In the past, consumers have tended to say fuck AMC's margins and bring in their own goodies either because AMC's were ass or because they wanted to save a few dollars. We expect this pattern to slow down substantially because of what they mean for the people. I recognize that this one is a reach, but it's my opinion not investment advice.
The shifting sentiment from "Netflix and Chill" to in-person, shared and enjoyable experience.
I don't like people, but I miss them. Maybe you do too. In a mid-pandemic Gallup Poll, we all know how much those matter, https://variety.com/2020/digital/news/...s-uncomfortable-1234846743/. If I just put my finger in the air and give 35% of Netflix's market cap to AMC... you see where I'm going with this.
I have seen others say this one as well, but I miss when everyone went to the movies and watch the same thing, on the same screen, at the same time because we can share.
Netflix and the streamers need to watch out because come July, the boomer is coming with that heat. Everyone is anticipating trips to movies. I tried to make the popcorn. I used a half a stick of butter. It's not the same.
Running to 7-Eleven to get Slurpees and Raisinets while Netflix is buffering is super annoying. Last time, my 7-Eleven didn't even have Raisinets. [Samuel L. Jackson voice] "Where's my mothafuckin Raisinets Jack?"
As you think through this point, remember the last time you saw Samuel L. Jackson in the theaters. you weren't the only that was scared, so it was entertaining and not stressful.
This point isn't totally out of my ass either. As streaming popularity has grown, so has AMC's revenues, not including 2020. People watch more movies.
Relationship with distributors and studios is still a strong moat.
Everyone here should check out a movie. They don't have the awesome search and browse capabilities afforded by Netflix or the sweeping device compatibility. You can stream from your laptop and connect to your.
? ?
Studios have ben delaying their films repeatedly to wait for AMC to open back up. To me, that sounds like immense power and a very strong relationship. I commend the studios for that and I think you have to be a hedge fund jackass not value that moat accordingly. Even Morningstar sees that and they usually don't see shit!
The Netflix app is cool but we can all agree, > 80% of the content is ass. Movies are a crap shoot. Shows are a political statement. And there's not enough Chapelle.
What Chapelle represents amongst so many other things is someone who has walked away from the traditional film industry. While I am all for the new person on the block, I feel movies are very hard to make. Sometimes the Netflix ones suck hard. I don't recall too many times when I went to a movie theater and had to leave because the movie sucked that bad. I've been disappointed, underwhelmed, but have never chucked my remote at the screen. I cannot say the same about Netflix. I have seen some terrible shit on Netflix, multiple times. I go there every day still because their app is so good, but Hollywood is still better at making films than Los Gatos or wherever the fuck. *
You can rent some of the movies that would be in theaters now. I'm sure the quality of the acting and dialogue will be superior to the shit we often get on Netflix.
I haven't done it yet, but I promise to do it for the first time tonight as I discovered the On Demand product line in doing some research for this DD. I assure you that the products will be overpriced, and the digital experience will be ass, but they just got $300 M to go figure that shit out.
Boomer CEO: Lower your price point and move your on-prem servers to EC2 instances. You got this! Re-invest hard for a while as you build up the integrations to be a first-class citizen in Roku, etc.
? Fresh Short-Squeezed Orange Juice.
In doing more research, I learned that both AMC and AMCX were seeing incredible short interest. Every resource I used reported both higher than they should be, but the inconsistency in the numbers from trusted and premium services has led me to withhold my numbers. The ranges for AMC were between 24% of total float and 68% of total float. When I tried to calculate myself based on short interest theory and the average volume of the stock as of a month ago, I landed at 62. Since I am retarded, the answer is probably in the 40-50.
? Current short volume: 44,670,000 shares
True Float: 71,000,000 shares
? Dollar Volume Sold Short: $385.50 million
? On the last one yes, you read that right. This idiots have sold more volume in price than the market cap of the stock. How could they do this shit all over again. They don't give a fuck. They think they will get away with it.
Regardless, some idiots sold another 8,000,000 shares short ON FRIDAY. Well, I have 2500 shares across four platforms. I am buying more on Monday, but my buddy had an interesting idea because the stock is so low. Options may actually be an even better play for me because I can buy hundreds of them (thanks to this subreddit). If I exercise as many options as I can hold the stock with diamond hands, it could accelerate the gamma squeeze that will happen if those short selling assholes don't back down. And we know they won't .
? In closing, as with $GME, I have fond memories of my times at AMC as a child and teenager. It was the first place my friend drove me after he got his license. ? Also as with $GME, I like the stock.
Viel Glück Jungs!
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