How AMC Stock Could Fall 85% From Here
Meme stocks AMC Theaters (NYSE:AMC) and Gamestop (NYSE:GME) remain popular topics of discussion, if not popular holdings.
AMC is now down 75% on the year, as CEO Adam Aron has continued issuing new stock. His AMC Preferred Equity (NYSE:APE) shares are down 66% just since their August issue.
Gamestop has done much better, down just 30% on the year. It could be worse. It could be Amazon (NASDAQ:AMZN).
But the joke is over. Credit Suisse Group (NYSE:CS), which itself is struggling for survival, now has a 95 cent price target on AMC. That’s 85% down from here.
Fall of the Planet of the APEs
AMC’s meme investor fans called themselves “APEs” and Aron gave the preferred shares issued this summer that unusual ticker symbol.
He also gave his APEs NFTs, which are digital assets that can in theory be traded. But they’re all essentially worthless, whether measured in dollars or crypto coins. A rising chorus now says so is the stock.
While the APEs remain at Stocktwits there’s a new defensiveness to the discussion. One said he was told to sell by a gas station coffee pourer. AMC’s most recent quarterly report showed a loss of $121 million on revenue of $1.16 billion. Its next report is due Nov. 9. The company’s market capitalization is $3.3 billion.
Gamestop investors are more sanguine. Some are pointing to a piece by our own Thomas Yeung predicting another short squeeze. That doesn’t mean Yeung is bullish on the business, just that increased short positions make it a candidate for a squeeze.
Gamestop’s most recent earnings release had it losing $108 million for its July quarter, on revenue of $1.13 billion which was down 4% from the prior year. Its next earnings report is due Dec. 14. The company sports a $7.9 billion market cap, still rich for a retailer.
AMC Stock: What Happens Next?
Gamestop is a stronger stock than AMC because its management hasn’t been selling stock as it fell like AMC’s Aron. There’s hope in that its collectibles business, on which it’s basing its comeback, rose 26% year over year in the last quarter.
Personally, I wouldn’t touch either stock with a barge pole. But I might buy more AMZN.
On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.