Why AMC stocks are skyrocketing again
As the Reddit crowd builds up, AMC shares are skyrocketing – and no, that’s not a late January headline.
What’s happening: Shares of AMC Entertainment have climbed nearly 120% this week as amateur investors show renewed enthusiasm for the movie channel. They climbed 36% on Thursday alone, reaching their highest level since 2017, and are up another 12% in pre-market trading on Friday.
So what’s going on and should Wall Street brace for another GameStop-style saga?
Maybe not yet, told me Giacomo Pierantoni, a research analyst at Vanda Securities who tracks retail investment flows.
It’s true that social media users are making a lot of noise about AMC, and their enthusiasm once again seems separate from the fundamentals of the action. Analysts predict that AMC’s revenue will almost double in 2021 and 2022 with theaters reopening, but the company still expects to lose money this year and next.
One reason: speculative retail investors are looking for new places to park their money, as some of the air is released from cryptocurrency transactions. Pierantoni observed that, just as Bitcoin and Ethereum selling increased, AMC’s retail purchases surged – as did the number of people buying risky but bullish calls popular among Robinhood investors.
The AMC appears to be a solid target as it has seen a recent surge in short-term interest, Pierantoni said. Short sellers borrow shares of a stock and sell it, hoping to buy it back at a lower price and pocket the difference. But if the price climbs dramatically, these investors are forced to buy back to limit their losses, which further fuels a rally. This is called a “short press”.
Investors in Reddit’s WallStreetBets community used this method to increase the price of GameStop shares earlier this year. Four months later, they seem to take a page from the same playbook.
Still, the meme stock mania isn’t back in full force.
“The total net retail investor flows overall – the figure is quite low,” Pierantoni said. He suspects some older retail investors are worried about the future and are choosing to stay away, referring to recent surveys by the American Association of Individual Investors.
But he thinks retail buying could pick up soon, as traders exit crypto and start looking for the next big thing.
“At the moment, only WallStreetBets are targeting AMC,” Pierantoni said. “But I guess in the next few weeks you’ll see a good rebound.”
Watch this space: Vanda is monitoring gaming stocks, noting an increase in the volume of transactions around the popular video game platform Roblox. Will the sector be the next beneficiary of a frenetic and liquidity-rich market?
BLACKROCK FLEXIBLE ITS MUSCLE AT SHAREHOLDER MEETINGS
BlackRock, the world’s largest asset manager, is increasingly willing to back climate and diversity votes at shareholder meetings – although campaigners say the company is still too conservative.
What’s happening: This week, BlackRock made headlines by voting for three of four new ExxonMobil directors named by hedge fund Engine No. 1, which wants the oil giant to radically change its approach to the climate crisis . Engine # 1 eventually got enough backing to oust at least two directors from the board.
In a report released earlier this month, BlackRock said that between January and March, it voted against management on one or more proposals at 35% of shareholder meetings, up from 30% for the same period in 2020. .
BlackRock also said it supports 75% of shareholder proposals on environmental and social issues.
One caveat: Most shareholder meetings take place in the spring, so the next round of data will be crucial. BlackRock does not immediately disclose how it votes in each meeting.
And although the company has indicated that it is more willing to vote against directors or support proposals than in the past, it still prefers to engage with business leaders behind the scenes.
“Engagement is our key mechanism for providing feedback or raising concerns to businesses about factors that affect long-term performance,” a spokesperson told CNN Business. “We maintain a permanent dialogue with companies to assess their business practices and explain the evolution of our priorities and expectations.”
Watchdogs believe BlackRock could do much more given its size and support to achieve net zero emissions by 2050. Last week, the International Energy Agency said it would require the immediate halt to investments in new fossil fuel projects.
“BlackRock has made big promises on its climate commitments and has certainly stepped up its rhetoric on its [calls] for climate action … but it has time and again this season of shareholders taken the easy road, supporting votes that are not fundamentally transformational when it comes to tackling the root causes of the climate crisis , ”Ben Cushing, financial advocacy campaign manager for the Sierra Club, told me.
He expressed disappointment that BlackRock backed Exxon CEO Darren Woods and senior independent director Kenneth Frazier, noting that accountability “has to start at the top.” BlackRock said in a disclosure it determined from a recent pledge that executives “are prepared to internalize shareholder feedback and lead the company … on a more ambitious course of action.”
THE LAST COMPANY TO LAUNCH A HOT IPO MAKES SCRUBS
Who says doctors and nurses can’t look good in medical scrubs?
That’s the idea behind FIGS, the trendy healthcare clothing company that debuted on Wall Street on Thursday at the New York Stock Exchange, reports my CNN Business colleague Paul R. La Monica.
What happened: In a sign of strong demand, FIGS – which also makes face masks and shields – valued its IPO above its expected range and sold more shares than expected. This was the first IPO to allow Robinhood clients to buy shares at the IPO price rather than after they started trading.
The shares have jumped more than 35% from their initial public offering price of $ 22. Priced at around $ 30, the company is valued at nearly $ 6 billion.
FIGS is the latest unicorn to reap the benefits of a hot stock market as investors seek new places to park their money, joining Jessica Alba’s ZipRecruiter, Oatly, The Honest Company and Coinbase.
But unlike many recently released startups, FIGS is profitable. The company reported net profit of $ 58 million in 2020 and profit of $ 16 million in the first quarter of 2021, as its sales and customer base more than doubled.
Big question: Can the company maintain its strong performance as more people get vaccinated against Covid-19? Co-CEO Heather Hasson thinks so.
“Medical professionals wore masks long before the pandemic,” Hasson told CNN Business. “The mask and face shields are part of the professional uniform.”