Now that I have your attention 🙂
I’ve come across a couple ideas the last few weeks on how to invest in the Taylor Swift bubble, but this one might actually make sense. However, risk seekers and Swifties only. The Taylor bubble could pop and this company could flop (go bankrupt).
Remember GameStop and meme stocks? Another beneficiary of that craze was $AMC, the theatre operator. Terrible business during Covid but Millennial nostalgia to the rescue. The stock hit crazy highs in 2021.
Their EPS (fwd) is -$3.16 and Long Term Debt is $4.8B which is about the same as their annual Revenue. They haven’t had positive Free Cash Flow since 2019. Cash is at $435M. Not the best of times. Could even be a cruel summer or their karma.
The stock started August in the $40s and is now $7 and change.
But then the Taylor Swift train rolled into their station. The Eras Tour film is slated to be released on Oct 13, 2023 after AMC Entertainment signed an exclusive partnership with the most powerful musician of this century (arguably).
Taylor paid for the film and is bypassing normal Hollywood procedure and distributing the film directly to theatres.
All those who couldn’t justify spending $10,000+ to see her live will gladly pay $20 for a movie ticket and however much for Taylor Tubs of popcorn or whatever else they can conjure up for concessions. The 350 million North Americans who didn’t get to go to the real concert will be lining up around the block for the movie.
This author on Seeking Alpha estimates the film will generate $2B in revenue. 57% for Taylor and 43% for $AMC or about $860M.
If you’re intrigued, you should read this article and perhaps the preceding bearish ones:
https://seekingalpha.com/article/4634224-amc-entertainment-be-prepared-for-the-taylor-swift-effect
Anyway, this likely isn’t a get out of jail free card for $AMC but it could definitely make their situation much less precarious; they can pay down some debt and not dilute shares.
According to MarketBeat Q2 saw $237M of net inflow into the stock from institutional investors:
https://www.marketbeat.com/stocks/NYSE/AMC/institutional-ownership/
That’s over 20% of their market cap.
On the chart, the RSI is below 30, meaning heavily sold-off. The stock is well below the Moving Averages. Bottom feeding time for those so inclined to speculate that Taylor Swift will save $AMC.
Short interest is only 10% so don’t expect a Wall Street Bets short squeeze like in 2021 but a mid-October price spike is definitely possible especially as the stock is at all-time lows and may well have saved itself from bankruptcy.
The P/S Ratio is 0.27 and the Communication Sector median is 1.13. The 5 year average of $AMC is 2.50. Presuming the Swift family would not enter an important business relationship with a company on the brink of bankruptcy, some mean reversion in the price to sales ratio is not unreasonable. 4x gets them back to the sector median.
I’m not going to give an official Strike Price but the more under $10 you can get it, the better at this point.
Good luck, Swifties.
