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stock market - i'm not feeling it.

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AMC just dropped the hammer on every meme stock CEO

The Meme Market is back with a vengeance. 

And AMC (AMC) is playing a different game the second time around. 

On Thursday morning, the company filed to sell up to an additional 11.5 million shares as its stock price continues a monster run higher. 

On Wednesday alone AMC shares rose 95% and in pre-market trading on Thursday the stock was at one point up another 20%. 

But this does not mark the company's first effort to capitalize on recent volatility. 

Earlier this week AMC raised $230 million from Mudrick Capital in an offering the company said "will allow us to be aggressive in going after the most valuable theatre assets, as well as to make other strategic investments in our business and to pursue deleveraging opportunities." 

On Wednesday, the company announced a new shareholder platform that will offer investors perks at actual movie theaters, including free popcorn. As we wrote in Thursday's Morning Brief, a company's stock is its currency and AMC is currently using a sharp rise in the value of this currency to improve its actual business. 

And with all these moves, AMC CEO Adam Aron and the whole executive team at the company are putting the pressure on their peers running other companies caught up in the meme trade to not just let this market moment come and go. These are episodes that management teams must cash in on.

Back in the winter when GameStop (GME) was the focal point of the first meme stock rally that management team sat on its hands for months. And now GameStop is in the process of looking for a new CEO. 

And while the rally in AMC and other meme names right now might not make sense, from the vantage point of a management team that tries to create value for shareholders the way to respond to this interest is clear: you sell stock until the market can't take it anymore. 

AMC warns investors

AMC's filing on Thursday also does not obligate the company to sell additional shares now or at any time. It merely allows AMC to reserve the right to sell stock. 

This filing is also full of all kinds of caveats that amount to AMC telling investors, "Do not buy our stock right now."

"We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last," the filing said. "Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment." The emphasis on this passage is the company's. 

The filing goes on to discuss short squeezes, social media, retail trading platforms and a host of other factors that AMC believes might be driving volatility in its share price. And for all of this, AMC reiterates time and again, the company is not responsible and offers no assurances to existing or prospective shareholders that any of this makes sense or will last. It is a filing unlike any we can remember reading. 

But the logic for a company to issue stock or pursue other initiatives when its stock prices goes nuts simple: as the price of your stock rises, the cost of raising capital falls.

For example, AMC's filing to issue 11.5 million shares on Thursday could, at current market prices of ~$60 per share, raise some $690 million for the company. Had the company sold 11.5 million shares at the beginning of May when shares were trading at around $10, however, that stock sale would've netted just $115 million to the company.

In general, selling stock is something companies would rather not do as it punishes existing shareholders by reducing their ownership stake. By doing nothing but watching the internet get interested in AMC memes, however, the company can now raise an additional $575 million and inflict no more pain on existing shareholders than it would have in early May. For a management team, this move is a no-brainer. The market is basically begging you to issue more stock at these prices.

And this shrewd move from AMC to sell stock into a wild market and then list caveat after caveat offers a clear blueprint to the teams over at companies like Bed, Bath & Beyond (BBBY), Express (EXPR), and BlackBerry (BB), all of which saw their share price rise more than 30% on Wednesday. 

If you're leading a company that gets involved in a meme stock moment, however, it is getting increasingly harder to say — as Bed, Bath & Beyond Mark Tritton did to Yahoo Finance on Wednesday — that "today's activity is just a day in time." 

Because in the meme market, today's activity is an opportunity, an opening, a calling from the markets to make something happen. Carpe diem indeed. 

Edited by TimS
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So on another note I keep hearing of a market correction is inevitable...heard that for the last 5 years too...I pulled out once and was sorry I did.  401k is up 30 percent for year and 6.5 ytd....I manage my own rollover from another 401k with just two etfs and I'm up over 40 percent...my pension ira which is conservative is at about 18 percent....even in this flat market I'm watching some things like small cap funds grow.   Ill admit I hate the large swings its hard to stomach but I rode out the last few and I'm better off for it.  I would be kicking myself if I hadnt.

 

I need about 5 more years to start living off my investments and retire fully....my guys all say stay in...even my 80 year old neighbor who is ex financial advisor says he's all in and not worried..

Inflation is hedging and this admin scares the hell out of me...pulling half out now seems like the prudent thing to do but ..who knows. 

 

Some of you went to cash..over fear of crash..were you sorry  if you missed anythadn't. Anyone buying the hype over another predicted crash

 

 

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18 mins ago, Baccigalup said:

So on another note I keep hearing of a market correction is inevitable...heard that for the last 5 years too...I pulled out once and was sorry I did.  401k is up 30 percent for year and 6.5 ytd....I manage my own rollover from another 401k with just two etfs and I'm up over 40 percent...my pension ira which is conservative is at about 18 percent....even in this flat market I'm watching some things like small cap funds grow.   Ill admit I hate the large swings its hard to stomach but I rode out the last few and I'm better off for it.  I would be kicking myself if I hadnt.

 

I need about 5 more years to start living off my investments and retire fully....my guys all say stay in...even my 80 year old neighbor who is ex financial advisor says he's all in and not worried..

Inflation is hedging and this admin scares the hell out of me...pulling half out now seems like the prudent thing to do but ..who knows. 

 

Some of you went to cash..over fear of crash..were you sorry  if you missed anythadn't. Anyone buying the hype over another predicted crash

 

 

My FIL who is a very astute investor says markets are cyclical, he still believes we have 5 more years of a bull market before the cycle is complete.     We'll see if the admin can break the cycle! 

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I’m retired and living off my portfolio. Never cashed out as I have always maintained a three years of currently live expenses worth of cash in case the market does drop precipitously. Three years would give the market time to recover some. Have not applied for social security yet either so also have that as a fall back. 

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1 hour ago, jimmy1956 said:

I’m retired and living off my portfolio. Never cashed out as I have always maintained a three years of currently live expenses worth of cash in case the market does drop precipitously. Three years would give the market time to recover some. Have not applied for social security yet either so also have that as a fall back. 

That's a smart idea....I keep  about 10 percent of my main portfolio in cash for that and buy ins during drops...making it a bit higher wouldn't hurt..we still have my wife's pension and 401k unaccounted for in the mix so I'm not too worried but nervous non the less.

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Nearly all who dance in and out of the market fail to capture its return especially over the long term.  Its impossible to make a prediction on where the market will be in 1, 3, even 5 year windows.  But you could conclude with near certainty it will be higher in ten years or more and you will enjoy all the dividends and cap gains along the way.  You need to understand your investments.  Focus long term.  Ignore the fear mongering of the main stream media.  If your worried about losing money in a correction or apt to pulling your money out stocks are not for you.

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12 mins ago, RocksMeEasy said:

Nearly all who dance in and out of the market fail to capture its return especially over the long term.  Its impossible to make a prediction on where the market will be in 1, 3, even 5 year windows.  But you could conclude with near certainty it will be higher in ten years or more and you will enjoy all the dividends and cap gains along the way.  You need to understand your investments.  Focus long term.  Ignore the fear mongering of the main stream media.  If your worried about losing money in a correction or apt to pulling your money out stocks are not for you.

agree, need to look at historical data, which has shown that the market will be higher in years to come than it is now. sure a few bumps along the way but it will bounce back as it has always done before 

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40 mins ago, RocksMeEasy said:

Nearly all who dance in and out of the market fail to capture its return especially over the long term.  Its impossible to make a prediction on where the market will be in 1, 3, even 5 year windows.  But you could conclude with near certainty it will be higher in ten years or more and you will enjoy all the dividends and cap gains along the way.  You need to understand your investments.  Focus long term.  Ignore the fear mongering of the main stream media.  If your worried about losing money in a correction or apt to pulling your money out stocks are not for you.

Good advice...now if I can only stop watching it daily I could have less stress....I dont like putting all my eggs in one basket and I'm aggressive on my own and conservative on my managed portfoilio...I think I'm doing better on my own but the stress wears on ya.

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38 mins ago, Baccigalup said:

Good advice...now if I can only stop watching it daily I could have less stress....I dont like putting all my eggs in one basket and I'm aggressive on my own and conservative on my managed portfoilio...I think I'm doing better on my own but the stress wears on ya.

I did that 15+ years ago. Loved it but hated it.  Lost sleep over that crap.  We have a financial guy now.  He's done very well for us. I don't mind the 1% fees.   

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1 hour ago, LBI SurfRat said:

I did that 15+ years ago. Loved it but hated it.  Lost sleep over that crap.  We have a financial guy now.  He's done very well for us. I don't mind the 1% fees.   

Feel the same way. Keep play money aside, and instead of sports ill gamble in the market and crypto a lil’

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18 hours ago, MakoMike said:

You guys who are sitting on a pile cash, you do realize you're loosing money everyday, right?

Analyst on Bloomberg this morning was asked if she's raising cash, she vehemently said no, with the Fed being accommodative she expects 2-3 more years of bullish market but then and very ugly reset when the Fed has to play catch up for being so accommodating. 

 

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2 hours ago, JaseB said:

Analyst on Bloomberg this morning was asked if she's raising cash, she vehemently said no, with the Fed being accommodative she expects 2-3 more years of bullish market but then and very ugly reset when the Fed has to play catch up for being so accommodating. 

 

Inflation for the month of May was 5%, anyone with cash lost money.

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20 mins ago, MakoMike said:

Inflation for the month of May was 5%, anyone with cash lost money.

What's do you suggest? gold, silver, bitcoin?

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