It’s the end of the game for AMC, but these actions can still go to the moon

At the end of 2021, we will no doubt be remembered how retail investors made their presence on Wall Street known. Despite having invested their money in stocks for over a century, retail investors have driven stock prices like never before.

The handful of businesses these retailers have crammed into are now known as “memes stocks” – essentially, companies are valued more for the hype they create on social media than for their operational performance. Topping the list for most memes investors is the movie theater chain AMC Entertainment (NYSE: AMC), which until last week was the best performing stock since the start of the year.

Wall Street and investors look to AMC’s pump-and-dump program

Unfortunately, AMC does not seem to want to “go to the moon”.

AMC’s bullish thesis, which ignores virtually all hard fundamentals, relies on hype, constant disinformation and outright lies to fuel an artificially higher stock price. The problem is, Wall Street and investors are aware of the misinformation and deceptive tactics employed by AMC’s retail investors, known as the monkeys, that have resulted in a 42% loss of AMC shares since the 28th. June, with much more inconvenience to do. .

Before the pandemic, AMC was never worth more than $ 3.8 billion. Today, with vaccination rates on the rise, AMC is worth $ 17 billion and that is:

• Nowhere near the peak sales produced before the pandemic.
• Losing money hand in hand, versus being profitable before the pandemic.
• Face billions of dollars in additional debt.
• Carrying approximately $ 473 million in deferred lease obligations, as of the end of March.
• Demonstrated loss of revenue to streaming competitors (for example, Walt disneyDisney + generates $ 60 million in revenue for the first weekend for Black Widow).

For starters, virtually any claim made by the monkeys to trigger a rally in AMC’s stock price can be easily proven to be false or misleading. Consider the following as two good examples of continuing untruths designed to artificially inflate AMC’s share price:

• Stocks sold short fell from around 102 million at the end of May to around 75.5 million at the end of June, according to official data (not estimated). The monkeys claiming that short-term interest is climbing or that “shorts haven’t covered” are completely wrong. It also seriously undermines the idea that “a short squeeze is coming”, which you will hear reflected on social media on a daily basis without any evidence or basis.
• Buying and selling short of stocks has no impact on the performance of an underlying business. It disproves the idea that short selling is bankrupting businesses (a fundamental and patently incorrect monkey thesis), and it also demonstrates that the monkeys did not save AMC. The capital that saved AMC from immediate bankruptcy came from share sales and debt issuances in 2020 and early January. Operating performance, not the buying and selling activity of investors, determines whether a business succeeds or fails.

It might be a rough road further down, but make no mistake the jig is in place and we have entered the dump phase of the cycle.

This trio of actions can go to the moon

The good news is that there is are companies with tangible growth potential that could really go to the moon. If you let your investment thesis come true, the following three actions can take off.

Limited sea

Don’t let anyone tell you that large cap stocks can’t go to the moon. Despite its apparently high market capitalization of $ 144 billion, the Singapore-based company Limited sea (NYSE: SE) has three rapidly growing operating segments that could make investors rich.

At this time, Sea is generating all of its positive earnings before interest, taxes, depreciation and amortization (EBITDA) from its gaming division. The popularity of Sea’s mobile games, coupled with the pandemic keeping more people in their homes, pushed the company’s quarterly active users up 61% in the first quarter to 649 million. More importantly, 12.3% of those users were paying to play, which is significantly higher than the industry average.

In the long run, the Shopee e-commerce platform is what will generate the most buzz. For example, the $ 12.6 billion Gross Merchandise Value (CMV) purchased on Shopee in the first quarter of 2021 greatly exceeds the total market value of 2018. Shopee is the most downloaded shopping app in Southeast Asia. Is and is rapidly gaining ground in Brazil.

Third, Sea has a relatively nascent but rapidly growing digital financial services segment. At the end of the first quarter, it had over 26 million paying mobile wallet customers. Given that many of the emerging markets in which Sea operates are somewhat underbanked, this digital financial services division could be a devious long-term growth engine.

Skillz

Another high-growth stock that could possibly go to the moon is the esports and games company. Skillz (NYSE: SKLZ).

Certainly, gambling is a highly competitive industry. Developing new games is a long and expensive process, and there is no guarantee that a new game will be well received. It is for all these reasons that Skillz did not follow the traditional path of development. Rather, it operates a gaming platform that allows players to compete against each other for cash prizes. Maintaining this platform doesn’t cost an arm and a leg (the gross margin has always been 95%), and Skillz and the game developers keep a share of the cash prizes.

At the end of the first quarter, Skillz had around 467,000 monthly active users (MAUs) paying to pay on its platform. That’s 17% of its MAU base. According to Wappier Gaming Apps, the conversion rate of paid gamers ranged from 1.6% to 2% in 2020. In other words, Skillz converts casual gamers into paid members at a considerably higher rate than other gaming companies. .

Skillz also has an incredibly lucrative partnership in its back pocket. In February, he signed a multi-year agreement with the National Football League (NFL). Football is by far the most popular sport in the United States. NFL-themed games and competitions are expected to arrive on the platform no later than 2022.

While Skillz is likely to lose money until 2022 as it ramps up its marketing, its insane growth potential and potentially lucrative margins cannot be overlooked.

Trulieve Cannabis

One last stock that can go to the moon is the American marijuana stock Trulieve Cannabis (OTC: TCNNF). According to New Frontier Data, the U.S. pot industry could generate at least $ 41 billion in annual sales by 2025.

While most US multi-state operators seek to be in as many legalized markets as possible, Trulieve adopted a strategy that seemed odd at first, but paid off incredibly well. Of the 91 dispensaries he opened in early July, 85 were located in Florida, where medical marijuana was legal. By absolutely saturating the Sunshine State, Trulieve has effectively swallowed up about half of all market share for dried cannabis flowers and oils. At the same time, its marketing costs have been kept low, pushing the company to 13 consecutive quarters of profitability.

But make no mistake, Trulieve longs to go beyond Florida. For example, it recently announced the largest U.S. cannabis acquisition in history – a $ 2.1 billion deal to acquire a multi-state operator Harvest Health and leisure (OTC: HRVSF). Harvest focuses on five states, including Florida. This means that Trulieve’s presence in the Sunshine State will soon become even more prominent.

However, the real appeal of the deal lies in the 15 dispensaries Harvest Health operates in its home market in Arizona, a state that legalized recreational weed in November. Trulieve should have no problem taking their Florida model and applying it to other key markets. It gives her a good chance to go to the moon in the future.