10 ms·

‘Meme stock’ rally rescues AMC theaters from $600M debt

130 points by Borlands 6y ago

xwdv 6y ago
Wow, it pays to be a meme stock. This means that memes could really be an untapped trillion dollar industry if they’re able to drastically raise the social capital of damn near anything, which can be used for profit purposes.
- toomuchtodo 6y ago
  Equity markets are the new GoFundMe. You even get a chance at a return.
  - hervature 6y ago
    It's the original GoFundMe.
  - sitkack 6y ago
    Low Orbit SPAC Cannon
- dehrmann 6y ago
  Remember the Hertz story in June? They were thinking about issuing shares. I dunno, it seems like meme stocks are in that position because they're small-cap companies facing significant headwinds and either got overshorted or have enough brand recognition that retail investors seem convinced they'll survive. I'd rather not be in the position of facing the headwinds and hoping a bunch of suckers show up who will give me money. What's funny is this is pointing out big holes in the "but it's 150% shorted" story. The retail buy/sell order flow seemed pretty balanced on Thursday according to Citadel, so there isn't much HODL. If the price holds for much longer, Gamestop can issue more shares, and holders of convertable debt are converting, likely selling the shares ASAP. I guess they squeezed some shorts, some more shorts probably moved in, and some of the money goes to debt holders, and some might go to the company. Some of it makes for a good story, but I wouldn't be surprised if PE and hedge funds quietly come out ahead in aggregate.
  - xwdv 6y ago
    I would love to see how irrational the market can get. I think we will see the limits of what is possible pushed in this century. I’m bullish!
  - rsynnott 6y ago
    Oh, they weren't just THINKING about it: https://www.wsj.com/articles/hertz-sold-29-million-in-stock-before-sec-stepped-in-11597100128 https://www.wsj.com/articles/hertz-sold-29-million-in-stock-...
    - dehrmann 6y ago
      (not sarcastic) Good for them!
  - snomad 6y ago
    > What's funny is this is pointing out big holes in the "but it's 150% shorted" story. Not sure I follow. The hedge funds are shorting the stock, debt holders are converting to stock, Retail (and plenty of big players) are buying and holding. 3 different parties.
    - PragmaticPulp 6y ago
      The "150% shorted" narrative has been deliberately misrepresented. WSB wants everyone to think that there are 150% short positions and only 100% long positions. In reality, each short creates a synthetic long, so there are always more long positions than short positions. WSB also seems to misunderstand the short interest. They're pushing the idea that short interest must start going down to indicate the squeeze has started. They're not accounting for (or deliberately ignoring) the fact that new short positions can be initiated at $360 which will be profitable when the stock inevitably falls. Reddit can't keep the stock high forever with a never-ending stream of buyers. That's why they've now shifted to pushing the narrative that everyone should buy and hold $GME to hurt Wall Street, which isn't really true either. WSB is also pushing the narrative that everyone is holding (or hodling) $GME shares and refusing to sell. This is perhaps the strangest claim of all, since it's so easily debunked by looking at the huge daily volume of shares traded. Shares can't be traded unless a buyer and seller agree on a price. The volume is extremely high, which means plenty of people are selling their $GME all day every day. WallStreetBets has devolved into a blatant pump-and-dump megaphone.
- mr_toad 6y ago
  Is this Poe’s law in action? Honestly can’t tell if you’re just being sardonic.
  - jiofih 6y ago
    No, he’s being sardine.
- gruez 6y ago
  >which can be used for profit purposes. Never underestimate how much money people are willing to spend just to fuck over other people ("hedge funds") or to get rich quick.
- nickysielicki 6y ago
  All of this is the symptom of a deeply troubled economy that has been propped up by low interest rates for far too long. There's nothing to learn from this, because there is no way to fit the deeply irrational notion of "meme stonks" into an ideally rational market. Corrections are coming.
- imiric 6y ago
  Memes are definitely used for profit already. Just ask any marketing department of a major company. They probably spend as much on astroturfing as they do on traditional advertising. And not only for marketing, memes are a powerful tool used by agencies and governments for propaganda.
mimikatz 6y ago
We shouldn't get our finance news from a gaming website.
- spike021 6y ago
  It's hardly even a gaming website. Polygon was only a true gaming site the first year or two it was around and then they got into posting the same kind of crap Kotaku and other sites post. Both it and The Verge are nothing like they were when first launched, but anyway that's off-topic.
- tom_ 6y ago
  But why not though?
- Avicebron 6y ago
  you're right, finance news should only be given in moderation by those upright and responsible folks who know better than us and work on wall street.
  - avs733 6y ago
    they know how to short stocks after all /s
  - koheripbal 6y ago
    "I don't believe in my doctors cancer diagnosis. I think my Aura is just out of alignment and needs more crystals." This is a pump-and-dump. Probably one of the biggest I've ever seen.
    - Avicebron 6y ago
      This is already jokes kid. All serious people vacated days ago, it's just morons now. We move.
- grumple 6y ago
  Have you seen financial news sites? The writing is pathetic and the details lacking. And most of the articles are ads pretending to be news.
bassman9000 6y ago
So AMC and its thousands of employees remain afloat for a few extra months? https://en.wikipedia.org/wiki/AMC_Theatres https://en.wikipedia.org/wiki/AMC_Theatres
jeffbee 6y ago
Why is Polygon trying to make this sound like Silver Lake might have lost money? They converted a pile of definitely worthless debt into perhaps-not-worthless shares. They are trying to make it sound like making 5-7% is a single day isn't great, but that is a spectacular return by any standard.
- kenny11 6y ago
  Reports are that Silver Lake sold their stake for $713 million, so they definitely got a decent return. https://www.barrons.com/articles/amc-entertainment-investor-silver-lake-sells-stake-51611962182 https://www.barrons.com/articles/amc-entertainment-investor-...
  - jeffbee 6y ago
    All the evidence I've seen so far is Wall Street is robbing Reddit blind. Insiders at these companies are selling into this short squeeze, BlackRock made at least a billion on GME, and now this.
    - heartbreak 6y ago
      You could make a case that some redditors are robbing other redditors blind too.
      - ratsmack 6y ago
        You could also make the case that it's just the shorts that are covering so they don't end up like GME.
      - PragmaticPulp 6y ago
        /r/WallStreetBets has devolved into a pump-and-dump echo chamber. I was a member of /r/WallStreetBets for several years. It was fun to joke around and talk quant stuff in some of the comment threads before it devolved into pure memes. Recently, I commented on a few of the front-page threads to correct some misinformation. They banned my account within minutes. They don't want to see any comments that don't support the pump. At this point, they're heavily moderating the sub to only allow posts and comments that glorify $GME. The only allowable content is that which insinuates anyone who buys $GME is about to get extremely wealthy, or that everyone buying $GME is sticking it to Wall Street. The situation has gone from funny to scary as Redditors are pouring money into $GME with expectations of getting rich and taking down Wall Street at the same time. Subreddit moderators have no interest in letting any comments through that might spoil the party before the early $GME buyers can exit their positions.
deleted 6y ago
[deleted]
ngcc_hk 6y ago
Smart move as long as it sell it quick. Buying bonds you want to be in the long term. And selling and get some money to say the firm is great. A financial move in a crazy situation.
iamleppert 6y ago
Finally, we've found a good way to monetize Reddit users!
- koheripbal 6y ago
  The correct way for a company to respond to a short squeeze (aside from laughing at the demise of the short sellers) is to issue new stock. Converting debt-to-shares is an equivalent. Company wins, Redditors lose. That's the crazy thing about all this. The stock isn't worth $30, let alone $300. This will all come crashing down, and the most naive later investors are going to be left holding the bag. The guy bagging my groceries yesterday told me he used his stimulus money to buy GME on RobinHood. That guy is probably going to lose that money to the guys that cash out first.
  - jannes 6y ago
    Issuing new stock might be somehow restricted. I am not very familiar with the US laws around this, but on Friday the SEC released a statement which contains a warning about "contemplated offers": https://www.sec.gov/news/public-statement/joint-statement-market-volatility-2021-01-29 https://www.sec.gov/news/public-statement/joint-statement-ma... > issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities. Does anyone know what that means?
fallingfrog 6y ago
Personally I enjoy the theater experience tremendously and I do hope that when the pandemic is over they are still there. One thing that coronavirus has taught us is that the whole capitalist system depends on constant flow of rents, loan payments, bond payments, and so on and if that flow is interrupted, the whole system has a heart attack and panics. You can’t just pause capitalism, there are all kinds of contractual payments that have to be made. In that way it’s actually much less flexible than, say, a planned economy. But I hope amc survives.
jannes 6y ago
What the hell is a "corporate IOU"? Why don't they say convertible bond?

130 points by Borlands 6y ago

xwdv 6y ago

Wow, it pays to be a meme stock. This means that memes could really be an untapped trillion dollar industry if they’re able to drastically raise the social capital of damn near anything, which can be used for profit purposes.

toomuchtodo 6y ago
Equity markets are the new GoFundMe. You even get a chance at a return.
- hervature 6y ago
  It's the original GoFundMe.
- sitkack 6y ago
  Low Orbit SPAC Cannon
dehrmann 6y ago
Remember the Hertz story in June? They were thinking about issuing shares. I dunno, it seems like meme stocks are in that position because they're small-cap companies facing significant headwinds and either got overshorted or have enough brand recognition that retail investors seem convinced they'll survive. I'd rather not be in the position of facing the headwinds and hoping a bunch of suckers show up who will give me money. What's funny is this is pointing out big holes in the "but it's 150% shorted" story. The retail buy/sell order flow seemed pretty balanced on Thursday according to Citadel, so there isn't much HODL. If the price holds for much longer, Gamestop can issue more shares, and holders of convertable debt are converting, likely selling the shares ASAP. I guess they squeezed some shorts, some more shorts probably moved in, and some of the money goes to debt holders, and some might go to the company. Some of it makes for a good story, but I wouldn't be surprised if PE and hedge funds quietly come out ahead in aggregate.
- xwdv 6y ago
  I would love to see how irrational the market can get. I think we will see the limits of what is possible pushed in this century. I’m bullish!
- rsynnott 6y ago
  Oh, they weren't just THINKING about it: https://www.wsj.com/articles/hertz-sold-29-million-in-stock-before-sec-stepped-in-11597100128 https://www.wsj.com/articles/hertz-sold-29-million-in-stock-...
  - dehrmann 6y ago
    (not sarcastic) Good for them!
- snomad 6y ago
  > What's funny is this is pointing out big holes in the "but it's 150% shorted" story. Not sure I follow. The hedge funds are shorting the stock, debt holders are converting to stock, Retail (and plenty of big players) are buying and holding. 3 different parties.
  - PragmaticPulp 6y ago
    The "150% shorted" narrative has been deliberately misrepresented. WSB wants everyone to think that there are 150% short positions and only 100% long positions. In reality, each short creates a synthetic long, so there are always more long positions than short positions. WSB also seems to misunderstand the short interest. They're pushing the idea that short interest must start going down to indicate the squeeze has started. They're not accounting for (or deliberately ignoring) the fact that new short positions can be initiated at $360 which will be profitable when the stock inevitably falls. Reddit can't keep the stock high forever with a never-ending stream of buyers. That's why they've now shifted to pushing the narrative that everyone should buy and hold $GME to hurt Wall Street, which isn't really true either. WSB is also pushing the narrative that everyone is holding (or hodling) $GME shares and refusing to sell. This is perhaps the strangest claim of all, since it's so easily debunked by looking at the huge daily volume of shares traded. Shares can't be traded unless a buyer and seller agree on a price. The volume is extremely high, which means plenty of people are selling their $GME all day every day. WallStreetBets has devolved into a blatant pump-and-dump megaphone.
mr_toad 6y ago
Is this Poe’s law in action? Honestly can’t tell if you’re just being sardonic.
- jiofih 6y ago
  No, he’s being sardine.
gruez 6y ago
>which can be used for profit purposes. Never underestimate how much money people are willing to spend just to fuck over other people ("hedge funds") or to get rich quick.
nickysielicki 6y ago
All of this is the symptom of a deeply troubled economy that has been propped up by low interest rates for far too long. There's nothing to learn from this, because there is no way to fit the deeply irrational notion of "meme stonks" into an ideally rational market. Corrections are coming.
imiric 6y ago
Memes are definitely used for profit already. Just ask any marketing department of a major company. They probably spend as much on astroturfing as they do on traditional advertising. And not only for marketing, memes are a powerful tool used by agencies and governments for propaganda.

mimikatz 6y ago

We shouldn't get our finance news from a gaming website.

spike021 6y ago
It's hardly even a gaming website. Polygon was only a true gaming site the first year or two it was around and then they got into posting the same kind of crap Kotaku and other sites post. Both it and The Verge are nothing like they were when first launched, but anyway that's off-topic.
tom_ 6y ago
But why not though?
Avicebron 6y ago
you're right, finance news should only be given in moderation by those upright and responsible folks who know better than us and work on wall street.
- avs733 6y ago
  they know how to short stocks after all /s
- koheripbal 6y ago
  "I don't believe in my doctors cancer diagnosis. I think my Aura is just out of alignment and needs more crystals." This is a pump-and-dump. Probably one of the biggest I've ever seen.
  - Avicebron 6y ago
    This is already jokes kid. All serious people vacated days ago, it's just morons now. We move.
grumple 6y ago
Have you seen financial news sites? The writing is pathetic and the details lacking. And most of the articles are ads pretending to be news.

bassman9000 6y ago

So AMC and its thousands of employees remain afloat for a few extra months? https://en.wikipedia.org/wiki/AMC_Theatres https://en.wikipedia.org/wiki/AMC_Theatres

jeffbee 6y ago

Why is Polygon trying to make this sound like Silver Lake might have lost money? They converted a pile of definitely worthless debt into perhaps-not-worthless shares. They are trying to make it sound like making 5-7% is a single day isn't great, but that is a spectacular return by any standard.

kenny11 6y ago
Reports are that Silver Lake sold their stake for $713 million, so they definitely got a decent return. https://www.barrons.com/articles/amc-entertainment-investor-silver-lake-sells-stake-51611962182 https://www.barrons.com/articles/amc-entertainment-investor-...
- jeffbee 6y ago
  All the evidence I've seen so far is Wall Street is robbing Reddit blind. Insiders at these companies are selling into this short squeeze, BlackRock made at least a billion on GME, and now this.
  - heartbreak 6y ago
    You could make a case that some redditors are robbing other redditors blind too.
    - ratsmack 6y ago
      You could also make the case that it's just the shorts that are covering so they don't end up like GME.
    - PragmaticPulp 6y ago
      /r/WallStreetBets has devolved into a pump-and-dump echo chamber. I was a member of /r/WallStreetBets for several years. It was fun to joke around and talk quant stuff in some of the comment threads before it devolved into pure memes. Recently, I commented on a few of the front-page threads to correct some misinformation. They banned my account within minutes. They don't want to see any comments that don't support the pump. At this point, they're heavily moderating the sub to only allow posts and comments that glorify $GME. The only allowable content is that which insinuates anyone who buys $GME is about to get extremely wealthy, or that everyone buying $GME is sticking it to Wall Street. The situation has gone from funny to scary as Redditors are pouring money into $GME with expectations of getting rich and taking down Wall Street at the same time. Subreddit moderators have no interest in letting any comments through that might spoil the party before the early $GME buyers can exit their positions.

deleted 6y ago

[deleted]

ngcc_hk 6y ago

Smart move as long as it sell it quick. Buying bonds you want to be in the long term. And selling and get some money to say the firm is great. A financial move in a crazy situation.

iamleppert 6y ago

Finally, we've found a good way to monetize Reddit users!

koheripbal 6y ago
The correct way for a company to respond to a short squeeze (aside from laughing at the demise of the short sellers) is to issue new stock. Converting debt-to-shares is an equivalent. Company wins, Redditors lose. That's the crazy thing about all this. The stock isn't worth $30, let alone $300. This will all come crashing down, and the most naive later investors are going to be left holding the bag. The guy bagging my groceries yesterday told me he used his stimulus money to buy GME on RobinHood. That guy is probably going to lose that money to the guys that cash out first.
- jannes 6y ago
  Issuing new stock might be somehow restricted. I am not very familiar with the US laws around this, but on Friday the SEC released a statement which contains a warning about "contemplated offers": https://www.sec.gov/news/public-statement/joint-statement-market-volatility-2021-01-29 https://www.sec.gov/news/public-statement/joint-statement-ma... > issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities. Does anyone know what that means?

fallingfrog 6y ago

Personally I enjoy the theater experience tremendously and I do hope that when the pandemic is over they are still there. One thing that coronavirus has taught us is that the whole capitalist system depends on constant flow of rents, loan payments, bond payments, and so on and if that flow is interrupted, the whole system has a heart attack and panics. You can’t just pause capitalism, there are all kinds of contractual payments that have to be made. In that way it’s actually much less flexible than, say, a planned economy. But I hope amc survives.

jannes 6y ago

What the hell is a "corporate IOU"? Why don't they say convertible bond?