To The Moon

🌟🌟🌟There is never a dull moment when it comes to Meme stocks.  One minute they are up sky high, the next minute they are down to the bottom of the ocean.

$AMC Entertainment(AMC)$  had a great week.  It closed up 4.1% on Friday and in the last 5 days, AMC has risen 10.9%.  However it is still down 18% year todate and in 2023, it has plummeted 87%.

Recently AMC has announced that it posted its highest attendance and admissions revenue during a weekend in 2024 - June 13 to June 16 at AMC Locations in the US and globally.

In the US, more than 1 million people went to the movies each day on Friday, Saturday and again on Sunday on that weekend.  The total US attendance at AMC Theatres was 3.8 million people during this period. 

This is highest attendance and admissions revenue in 2024.    The strong attendance at AMC Theatres both in the US and internationally is due to 2 movies - Inside Out 2 and Bad Boys: Ride or Die.

AMC Chairman and CEO Adam Aaron said that the movie going public has demonstrated that the magic of movies and theatrical experience is alive and powerful. 

In May $GameStop(GME)$ and AMC have again captured the small investors' attention, causing a resurgence of meme stock frenzy that gripped Wall Street 3 years ago.  Keith Gill aka Roaring Kitty has returned after a 3 years' absence and his loyal followers are back in action. 

AMC was able to raise another USD 250 million from a stock sale on the back of this resurgence in May.    

AMC is on a mission to reduce its debts and this fresh injection of new funds is a life saver.   AMC is also holding confidential talks recently with some of its lenders about lowering its debt load and extending near term maturities.  Currently AMC has a debt load of USD 4.5 billion of long term borrowings.  As of March 31, AMC had more than USD 2.8 billion of maturities due in 2026.  This includes a USD 1.9 billion term loan and nearly USD 1 billion of second lien notes. 

In contrast $Faraday Future Intelligent Electric Inc.(FFIE)$  share price fell 15% on Friday.  This is despite the fact that Nasdaq has granted Faraday Future's request for continued listing on Nasdaq.  However this extension of stay is subject to the company's compliance with the periodic reporting requirement by July 31 2024 and the minimum bid price of USD 1 per share for 10 consecutive days by August 31 2024.

Faraday Future said that it is  taking definitive steps to timely satisfy the conditions set forth by Nasdaq. 

In order to regain the USD 1 level, Faraday Future has proposed a reverse stock split between 1 for 2 and 1 for 40 at its upcoming shareholders meeting in July. 

The reverse split will likely be greater than 1 for 2 as Faraday Future said that it would like to have a stock price of at least USD 5 per share post reverse split.  Based on the current price of 51 cents, a 1 for 10 reverse split would meet the USD 5 per share criteria. 

Another good news was the recent meeting Faraday Future had with United Arab Emirates investment firm Master Investment Group ( MIG) and its CEO Sheikh Abdullah Al Qassimi.  There is much hope that MIG would invest in Faraday Future.  This would provide the much needed cash injection for Faraday Future to continue its operations. 

Performance wise Faraday Future is up 32% for the week even though it dropped 15% on Friday. 

It is really hard to predict the movements of Meme stocks like Faraday Future and AMC.  Just when you think there is no hope with these stocks, they jump like a rocket to the moon.  Fundamentally both Faraday Future and AMC are loss making companies.  But because of social media hype and frenzy they are given a new lease of life. 

Faraday Future is in an industry where EV makers are facing intense competition.  Even the market leader like $Tesla Motors(TSLA)$  is seeing an erosion of its market share.  So it would be an uphill climb for Faraday Future to survive. 

AMC is in a sunset industry where movie going is being overtaken by online digital streaming.  Its real competitors are $Netflix(NFLX)$  Disney and Amazon which offer customers an almost unlimited plethora of movies, TV shows at most competitive prices. 

That is why I would not take the chance to short these meme stocks as it is very risky.   Short sellers have been burnt in the past due to the phenomenon of Short Squeeze.  This happens when the price of a stock rises to such an extent that investors who have sold short, had to purchase the stock in order to limit their losses, causing the price to rise further. 

I prefer JOMO - the Joy of Missing Out rather than FOMO - Fear of Missing Out with regard to Meme stocks. 

As Warren Buffett likes to say "The Stock market is a device for transferring money from the impatient to the patient.  Time is the fried of the wonderful business, the enemy of the mediocre." 

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