AMC Insiders Dumped Huge Portions of their Shares after WTF Spike, AMC Sold Shares, and Wanda is Already Outa There

But who’s buying? CEO Adam Aron is schmoozling and bamboozling the Reddit crowd.

By Wolf Richter for WOLF STREET.

There has been a paradigm shift: As of now, it would be no big deal for AMC Entertainment, which lost $4.6 billion in 2020, if Americans don’t go back to the movies to the extent they did before – I mean, why would they, with the big screens and fancy sound systems and cheap popcorn they have at home and the limitless choices they have via their streaming services? It would be no big deal because AMC is now in the business of selling its own shares and riding the meme-stock crazy-train.

While CEO Adam Aron is schmoozling and bamboozling the Reddit crowd, insiders and executives are dumping their shares hand over fist.

Gary Locke, a member of AMC’s Board of Directors, is the king of share sales in terms of the portion of his stake that he dumped on Thursday: 63.7% of his holdings, according to SEC filing on June 4. He obtained on average $49.82 per share for the 34,293 shares he sold, walking away with $1.71 million.

And the Reddit crowd gobbled them up. During the first four trading hours on Wednesday, AMC shares had more than doubled to briefly hit $72.62, which was apparently an irresistible once-in-a-lifetime opportunity for the executives and directors to dump their shares. A few months ago, AMC shares were at $2.

AMC ended Friday in afterhours trading at $43.72. So Locke had timed his sale very well.

Locke knew what he was doing. The former Governor of Washington State served as Ambassador to China from 2011-2014, the time frame during which Dalian Wanda Group, a Chinese conglomerate, bought a controlling stake in AMC. And Locke became Wanda’s man inside AMC in 2016. But he is up for reelection next month, and with Wanda out of the picture – it had sold nearly its entire stake earlier this year – he is likely outa there.

Carla Chavarria, Senior VP and head of human resources, dumped 47.7% of her stake on Thursday, selling 40,346 shares for an average price of – yes, wow, drumroll, superb timing – $62.67 a share, according to the SEC filing on Friday, walking away with $2.53 million.

John McDonald, Executive VP of US operations, is another standout. On Thursday, he sold 30,000 shares for an average price of $56.59 (for $1.70 million), after having sold 50,000 shares on April 22 at an average share price of $9.92 (for $496,000), and after having gifted another 7,500 shares. In total, since April 22, he has dumped 48.3% of his stake.

You can see some of the SEC insider data right here on WOLF STREET by clicking on the stock symbol [AMC] and scrolling the down the page until you get to the 13-F filings and the insider trades (this works for all stocks discussed here).

Combined the nine executives and directors sold nearly $10 million in shares since mid-April; they sold 293,000 shares, or 31.6% of their combined holdings.

John McDonald has three sales on this list and Daniel Ellis has two. The “% stake sold” reflects those sales compared to their stakes before April 16. If your smartphone clips the seven-column table, hold your device in landscape position:

Sale Date shares sold $ sales $ per share % stake sold
03/Jun Elizabeth Furst Frank EVP, Content 21,462 934,455 43.54 18.9%
03/Jun Carla Chavarria SVP, HR 40,346 2,528,548 62.67 47.7%
03/Jun Gary Locke Director 34,293 1,708,553 49.82 63.7%
03/Jun John McDonald EVP, US Ops 30,000 1,697,700 56.59 48.3%
03/Jun Daniel Ellis SVP, Develop., Internat’l 13,766 681,659 49.52 26.0%
03/Jun Anthony Saich Director 10,330 604,305 58.50 23.8%
01/Jun Stephen Colanero EVP, Marketing 15,000 411,306 27.42 13.8%
21/May John McDonald EVP, US Ops 7,500 gift
14/May Kathleen Pawlus Director 14,495 201,046 13.87 30.5%
22/Apr John McDonald EVP, US Ops 50,000 496,000 9.92
16/Apr Sean Goodman EVP, CFO 45,404 430,793 9.49 22.5%
16/Apr Daniel Ellis SVP, Develop., Internat’l 10,000 94,830 9.48

 

CEO Adam Aron is not on this list. He has serially vowed that he hasn’t sold his shares, which the Reddit crowd ate up. He has not discussed if he uses hedging strategies, such as swaps, to protect his gains. He is playing the Reddit crowd for all it’s worth, rubbing shoulders with them, teasing them, joking with them.

The biggest seller of all has been Dalian Wanda Group. The marvelous crazy-train that started to pick up momentum earlier this year drove AMC shares into the double-digits, from the low single-digits, after the company had floated the idea late last year that it might have to file for bankruptcy, and Wanda was already toying with the corollary that it would end up holding a big empty bag.

But as share surged starting in January, Wanda started unloading its stake in massive piles to the Reddit crowd. And it’s outa there.

AMC itself has been selling shares in waves as well, recently at huge prices, raking in over $2.2 billion, seven share offerings since last summer. The latest came on Thursday, after AMC’s share price had spiked to $72 on Wednesday. While the executives and directors were busy dumping their shares, AMC also sold shares. That just looks awful.

I can imagine that on Thursday in the Zoomified C-suite, no work at all got done beyond of selling shares and jubilating.

When the share offering was announced after the executive had unloaded their shares, shares began to dive. The offering came with one of the starkest warnings and biggest CYAs ever: Don’t Buy our new shares “Unless You Are Prepared” to lose “all or a substantial portion of your investment.” AMC ended up selling $587 million in new shares. And it’s planning to sell a lot more.

Share sales are diluting existing shareholders. But who cares? Dilution only matters to earnings per share, and those earnings per share were a huge loss of $39.15 per share in 2020, and given the stress the brick-and-mortar theater business was in and will be in going forward, diluting those shareholders means mathematically reducing the “losses per share.”

Whatever the looks of it, reality is that the $2.2 billion raised from those share sales will allow AMC to continue to burn cash and hobble along and pay its creditors for a while longer. When AMC runs out of cash to pay its creditors – a fate it was contemplating last fall as it discussed a possible bankruptcy filing – that’s when the gig would be up for shareholders.

But that’s not happening as long as CEO Aron can schmoozle and bamboozle the Reddit crowd into buying its shares at these big-fat crazy-prices while the insiders are unloading. No movie theaters required. Just hand out free popcorn and sell the shares.

Since the WTF moment on Wednesday, shares have plunged 39% to $43.72 Friday afterhours, but they are still well above where they’d started out Wednesday morning, which shows just how crazy this stuff is (data via Investing.com):

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  141 comments for “AMC Insiders Dumped Huge Portions of their Shares after WTF Spike, AMC Sold Shares, and Wanda is Already Outa There

  1. MonkeyBusiness says:

    When the Reddit crowd gets wiped out later, they’ll only have themselves to blame. Not sure what they are trying to achieve at this point. Punish shortsellers? LOL. Say one or two hedge funds blows up, 3 or 4 more will take their place.

    Can’t wait for that bunch of losers to get their comeuppance.

    • Resjudicata says:

      You ain’t seen nothing yet. When the next crisis hits in three to seven years the fed will triple its balance sheet. And all of this will look like child’s play. The fed is a one trick pony: asset inflation.

      • timbers says:

        Based on past Fed actions I agree with you which is why I don’t expect to see a sustained asset crash in my lifetime. The Fed is in too deep now and boxed in, it’s only option is endless balance sheet expansion and etrnal ZIRP. And that can go on for a very very long time.

        • RightNYer says:

          I agree they are boxed in and have no options, but I agree that it can go on for a very very long time.

        • Anthony says:

          timbers

          I can only guess you have never experience real inflation and the panic that central banks and governments show at such a time. By real inflation I mean things like a pint of beer going up from 10 pence a pint in 1973 to 40 pence a pint in 1976. I know you probably don’t know what pence are, or a pint of beer but you do know maths… The results were mortgage rates of 15% to 21%. Just imagine what that would do to asset prices……

        • timbers says:

          Anthony, I see real inflation now. I have 65k miles on my car. I always pay for a car in cash, no debt. The prospect of having to pay about 2x what I paid 6 yrs ago is chillilng.

          Also too I live thru the seventies and had a boyfriend who had one of those 18% Jimmy Carter/Paul Volker mortgages in a working class neighborhood in Chicago. He was supposed to close, a glitch came up, during which time mortgages went thru the roof. He wasn’t happy about it believe me.

        • Fromks says:

          They tapered last time unemployment was around this level.

          fred.stlouisfed.org/graph/?g=EwTT

        • RightNYer says:

          Sorry meant to say “don’t agree that it can go on along time.” The political pressures will be too great by then

        • Cas127 says:

          “And that can go on for a very very long time.”

          If the Fed’s endless money dump weren’t well known, hated, and loathed, the overwhelming impetus towards AltDollars would not exist (regardless of anybody’s opinion on any given AltDollar…the point is that hopeless dollar devaluation provides the primary motive).

          Once faith and confidence is lost (after being abused for extended periods of time) currencies and countries can collapse very quickly (there are many historical examples of currencies being gutted through abuse).

          The time to worry is when America’s leadersh*t class keeps saying don’t worry.

          When the catastrophe actually comes, the DClass will have nothing to say to Americans…after having long gone to work for Chinese media…

        • Resjudicata says:

          “Sustained” is the key word. Sure asset prices can go down; perhaps for years. But if your time horizon is 10+ years, especially if it’s 20+ years, as long as you keep a good rainy day find, I think you can buy solid assets with strong confidence. The fed WILL pull a rabbit out of the hat and force prices up.

        • Resjudicata says:

          Anthony: I wasn’t alive/old enough to really experience the inflation of the 70s and early 80s. But what I can tell you is that my grandparents bought their last house for $17k in 1961 (during or at the tail end of a recession; the fed was easing). My parents still own that house and its now worth about $500k.

          My parents bought the house where they live in 1982 for about $50k and it too is now worth about $500k (coincidentally during or at the tail end of a recession; the fed was tightening; their interest rate was around 15% dad tells me).

          My family bought their dream house in June 2020 (coincidentally during a recession; the fed was easing — massively I’ll add; so we thought we should strike quickly). We negotiated a good deal with a seller who had moved. The house had already been on the market for the better part of a year, and the seller was concerned 2008 was about to repeat itself and I played into that when I spoke to the seller (note to realtors: don’t ever let the buyer and seller talk b/c one of them is probably sizing up the other one). When we signed the contract, the current economic discussion was whether we were going to “retest the lows.”

          I don’t really care what happens to the price of our house over the next 10 years, other than gloating to my wife. We have good jobs, a rainy day fund, a bedroom for each child, and we aren’t selling. But I think we got a good deal and, in the short term, it looks like we bought at the right time. Over my lifetime, I firmly believe the price will go up, just like my parents and grandparents. During that time the price of everything will likely go up, along with wages. That’s how our system works. The system requires higher prices and debt in perpetuity. If prices aren’t going up fast enough, the fed will force them up. And if they go up too fast, the fed will slow them down. But either way, prices are going up in the long term, until the system blows up. Then they will pull a new trick. Probably: issue a new currency and start the game of rising prices all over again.

        • Resjudicata says:

          Fromks: and they’ll taper again if they can; meaning prices are going up sufficiently. Idk if unemployment (one of their mandates) really has anything to do with it or if that’s just a front. I believe in 81ish they raised rates in the face of rising unemployment. This suggests they are more concerned about the direction and speed of prices than jobs. Also I think Powell really wanted to normalize policy. But it ended up they couldn’t. And then the next crisis arrived and they had to do more to keep the system going.

        • Resjudicata says:

          Fromks: 6/4/21 Federal Reserve policy makers should be “deliberately patient” and wait to see more evidence that the U.S. labor market has made more progress before they consider cutting down their asset-purchase program, Cleveland Fed President Loretta Mester said.

      • Old School says:

        I am not sure about that. Total asset prices is in excess of 525 Trillion worldwide. Some say that number realistically should be in the $250T range.

        With interest rates being at zero already that basically leaves QE. Are they really going to be able to stop a $250 T panic by purchasing 10 or 20T of assets? Possible they can bluff market by big talk, but at some time market will panic.

        • RightNYer says:

          Right. The Fed’s massive printing is not nearly massive enough to move the entire world market unless people give credence to its jawboning.

          The printing on its own doesn’t cause bubbles, it’s people’s reaction to the printing. “The Fed has my back.”

        • Resjudicata says:

          Yes. They were going to buy bonds in 2020. Next crisis I believe they will buy stocks, houses, and used cars at face/pre-crisis levels if they need to. The fed is not a quitter.

        • Cas127 says:

          “Total asset prices is in excess of 525 Trillion worldwide. Some say that number realistically should be in the $250T range.”

          This.

          As in corporate bankruptcies, people don’t appreciate that the carrying values of assets on balance sheets are just (potentially poisoned) estimates…most everything except cash is carried at some estimate or historically paid price that has not faced the test of current/emerging/crisis conditions…so those book values can evaporate fast.

          But the accompanying liabilities don’t go away without a (bankruptcy) fight.

          So what looks like a “safe” balance sheet today is always one insider initiated/admitted write down away from catastrophe.

          And while the income statement/cashflows may provide some current support for asset values (if not cooked), they can evaporate very fast too…providing insight into only immediately current circumstances.

      • Old school says:

        I would encourage Wolfstreet readers to listen to David Hunter an independent market strategist for one possible scenario of how this is going to play out. Not that he is going to be right, but if he is the average person is going to have a tough time navigating what comes next.

        Long story short he is expecting a fast blow off top in the next few weeks taking SP500 to at least 4700 and maybe to 5000. Then a pretty quick stock market bust to about 1000 and then one more big Fed push for asset inflation. Says this stock market top will be the high for next 20 years or so.

        • misty says:

          Interesting thesis, he’s been making the same production for about a year. He keeps pushing out the timeliness. Still quite possibly.

        • Resjudicata says:

          Ok I looked him up. Read his LinkedIn bio. He’s been and investment manager/advisor for a long time, but nothing I recognized as super spectacular.

          I watched a 20 minute YouTube interview. Not as well spoken as Stockman or able to communicate ideas as Schiff, but I got the gist he’s a similar kind of goldbug/permabear.

          Also skimmed his Twitter. He got some stuff right and some wrong. Notably he was asking for the fed to drop rates and do a $3 trillion QE in 3/20 (maybe bc gold was puking). I went back to 1/1/19 and on that day he tweeted that the market was going to fall 80% in the second half of 2019. That’s all I needed or wanted to know.

        • MonkeyBusiness says:

          1000? ROFL. That’s going to be wrong for sure. No freaking way. I can see 2000, but we will never see 1000 again in this lifetime, unless oil runs out, and by that time we have bigger troubles to worry about.

        • Resjudicata says:

          MonkeyBusiness: Right? If the s&p500 drops to 1000 on the day the fed announces its new “programs” I will go all in. Every dollar I can realistically conjure up. And my second thought is: if it goes to 1000 and stays there the game is up and you should be ready for a mad max scenario with local warlords and a new government in which case the money wouldn’t be worth anything anyway.

        • Old School says:

          Maybe 1000 sounds impossible, but bottom was 666 12 years ago, so 1000 is not impossible imho. In great depression stock market dropped by about 1/2. A lot of people thought the bottom was in for it to go down another 2/3 effectively wiping them out.

          I see that as a possibility as we have been trained to buy the dip on a strong pullback. Market is a beguiling creature.

        • MonkeyBusiness says:

          OldSchool, things have changed. The Fed is a lot more active now, and watch the government stand behind the banks as soon as any of them gets into trouble. Also unlike last time, the rich owns most of the stock market now, no way the stock market will be allowed to crash that far down.

          Only a world ending event can bring the stock market from 5K to 1K in a short period. Can’t even think what that would be.

      • Resjudicata says:

        By the way. Wolf: I want to thank you. I read your site daily. You provide an invaluable service to the little guy like me who isn’t in finance, or the know. I commonly learn economic and finance info here first, or only here. I like that you generally provide the info w/o opinion, allowing us to interpret the info and figure out where we think the piece of info fits in the economic puzzle. Thank you

    • Charles Ponzi says:

      Don’t really understand the vitriol and angst. The Meme Men are having fun. They are not in it for the money it’s for the sense of community and naive belief that they are putting to the man.

      They can no longer trigger their parents by their antics so they are now triggering the traditional investment community. In a way it’s ironic and amusing that a mob of Red Bull swigging adolescents is manipulating the best and brightest masters of the universe.

      No doubt the end will be painful for the majority of those in the game but as Chuck Prince said:

      “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

      • Anthony A. says:

        I wish I had as much fun as those “kids with diamond hands” when I was their age.

      • Petunia says:

        Video gaming has jumped the shark. The meme men are practicing video gaming in real life. It’s a big game to them where the money is equivalent to the points in a game. They have always “paid to play” so losing the money is equivalent to buying and using up microsoft points. They just don’t care about the money.

        One of the reasons they are doing so well is their aim is to have fun and break the game. Since they are not “rational investors” the market has no hedge against them. To paraphrase the ancients, “The games have begun.”

        • Old School says:

          This is another unintended consequence of Fed policy. In reality long term stocks return just under 6% real returns per year.

          Most young people should be obtaining skills that should make them valuable in the labor market and not gambling their way to nearly certain wipeout when the tide turns.

        • carolinus says:

          Hit the nail on the head, you have, Petunia. When the fed has already wiped out our power, what do us millennials have to lose anyway? When the cost of real estate, healthcare, and education are disappearing over the horizon and saving and investing with 6% returns will clearly never get us there, why not kick the table over? Fortunately a lot of us sniffed out that AMC wasn’t the real play, but clearly many have not. It will be a tough lesson for them, but nihilism is as comfortable a platform for hard knocks as one can find.

        • Nathan Dumbrowski says:

          Gamification is the trendy word. Earning points, upgrade and all that jazz. Used in corporate America to today to judge call center employees and make them try to get a high score by the panel of people reviewing their calls

    • Trucker guy says:

      I mean don’t get me wrong I don’t like the general reddit crowd in general but why the hate for the wsb types? They’re just gamblers losing all their money with a few hitting the lottery. And like nearly all that hit the lottery that money will be gone because it is money to these kids, not wealth. They don’t understand the difference. Even the brainchild behind the entire gme thing will likely be broke in 10 years.

      Why bother even being mad at them? They’re harmless Patsy’s with fanciful ideas of stealing money from hedge funds because they’re all too young to know the stock market crashes.

      I’d be much more bothered with the other big swath of reddit that thinks the government can fix all woes if only it wasn’t for those mean ole republicans. If we only had a single party system of neoliberal democrats and democratic socialists we’d have nary a problem in the world. And what’s so sad is reddit is supposed to be the hangout of college educated people who should know better than single party governments. I can’t begin to imagine what kind of ideas circulate on Facebook or whatever Instagram and the like are.

      • LK says:

        Republicans want a single party government too.. had to bring politics into it?

        • Trucker guy says:

          Nope, I dislike the republicans more than the democrats after Trump’s shakeup to the republicans. You missed the point. It was against any form of single party governments.

        • LK says:

          Oh, I got the point. But now we have a more rounded understanding of yours. Thank you for the clarification.

    • gerald williams says:

      Amen to that.

    • JK says:

      They do it because they are greedy like all people (varies per individual) and don’t think they will end up being bagholders.

      What I have observed is people younger than me aged 20’s-40’s talking about stock market, and cryptocurrancy. When I see all this talk about easy money making (not actually working as in a job and making money being productive) then I get uneasy. I recall this back in late 1999 and early 2000. Everyone wants in on the action. There is nothing wrong with this, but to me it’s a contra indicator.

      I’m 60/40 on crypto these days. Took profits on BTC at 46 and 56 before the spike up to 65. I still have a toenail in the crypto pool, but not sure what to think about that any longer after recently reading something about Tether and questions whether funds were really there. I know our government has no scruples when you look at spending, what really is at Fort Knox, etc. but I find it just as disconcerting that these cyrpto markets are sort of like the Wild West too.

      Time will tell. Good luck.

  2. 2banana says:

    You say it like it is a bad thing…/s

    Epic won’t even begin to describe what is coming.

    “While CEO Adam Aron is schmoozling and bamboozling the Reddit crowd, insiders and executives are dumping their shares hand over fist.”

  3. Brent says:

    WTF spike ?

    Scientifically speaking it is a “Dirac Delta Function” which assumes the value of “infinity” at zero and equals “zero” elsewhere.

    As strange as it looks it still can be integrated or used in differential equations.Laplace transform for example works like a charm…

    I guess Jerome Powell threw out all his old economic textbooks with gently sloping curves and mastered the methods of Nonlinear Dynamics (aka Chaos Theory in common parlance).

    Way to go Jerome,sagging stock market needs yet another $1T impulse !!!

    • Alku says:

      how would you interpret that the delta function integral is always 1?

      • Brent says:

        Parturiunt montes, nascetur ridiculus mus…
        Horace

      • Petunia says:

        The vertical line reduces to a point, the only point where it is defined. It can also be defined as i, the square root of minus one. i is a point of radical transition from the norm, from a defined point to a vector shooting straight up.

        • Alku says:

          Petunia: sorry, I didn’t understand your point about i=sqrt(-1).

          The question was about the function as such. Namely, in Brent’s model of the WFT as a delta-function in the coordinates (time, price), the area under the curve will always be 1 – regardless of the spike size.

          Maybe Brent will introduce one more coordinate to elaborate the model and in 3d it will be clearer? :)

    • Old school says:

      Any high level math is a waste of time if you are a long term stock investor. It’s all estimating the earnings stream and determining what you are willing to pay for it.

      Most companies earnings are too volatile to estimate so you can use the SP500 as a whole or find a few steady earning blue chips and buy them when they go on sale.

      • Brent says:

        Higher Math is not entirely useless for investing.

        For example options and futures are as old as Ancient Rome.Hungry farmers sold their wheat crops 6 months ahead of the harvest.Then the theory of futures/options pricing was developed in the 1970’s.

        Also many investors noticed that there are high risk/high return vs low risk/low return assets, and that some asset prices tend to move in the same (or opposite) direction.

        Hence the Modern Portfolio Theory aka Markowitz formula.

        Even a small two bit investor could assemble rudimentary portfolio of stocks,bonds and treasuries using Excel app and have a relative peace of mind.

        It kind of worked before Fed’s antics made investing utterly meaningless.

        Everything skyrockets.Then dips slightly.Next day skyrocketing resumes.

      • Nathan Dumbrowski says:

        As was mentioned AMC is so far underwater that adding shares helps their share price loss per share. When that is a good thing I think that is a BAD thing. These are crazy times.

  4. MarMar says:

    Kudos to them! Would anyone here, if they worked at AMC and had stock options, NOT sell into this crazy market?

    As far as existing shareholders go, they’ve had quite some time to see the mania around the stock and decide if and when to sell.

    • The AMC executives have an incentive to sell what could soon be worthless shares, but they also have an incentive to hold in order to convince the public that they believe in the company. It seems like it would be in their collective interest interest to pay a hedge fund to short the shares for them to make it look like they are long even though they have hidden offsetting positions. So even if short interest in AMC declines, I would be unsure as a Reddit ape whether the squeeze is working, or if the executives are simultaneously buying and selling.

    • Petunia says:

      If the fortunes of my company are being dictated by a bunch of guys playing dungeon and dragons, hell yeah I would sell. Oh wait, ….

  5. Bill Grainger says:

    Are there not laws against such blatant rip offs? Doesn’t the SEC or Consumer Financial Protection Bureau (CFPB) knock on the door of these “C” suites?

    • Resjudicata says:

      It’s a free market.

    • Jeremy Wolff says:

      They have to report the sales in sec filings. It’s all kosher.

      • Old School says:

        Lawsuits and Federal charges may start if shareholders get totally wiped out. As long as ponzi inflates nobody is too interested in legal action.

        • Rosebud says:

          lol, liberation of liquidity, 3qtr
          …followed by
          mom, modulation of mother*, 4qtr,1qtr
          …and
          IPO, innocent pavo operation, 2qtr 2022

          * belated response to thread Not There Yet Modular

    • Javert Chip says:

      Bill Granger

      What is it you don’t you understand about “… Don’t Buy our new shares “Unless You Are Prepared” to lose “all or a substantial portion of your investment…”?

      How much more fully disclosed could it possibly be? You’d need to physically handcuff these folks to the bedpost to “protect them from themselves.

      What you have here is a group (Reddit) who knowingly & willing are doing what everybody used to consider “theoretical goofy stuff” to watch their temporary impact on the market (which is considerable).

      Given probability, some meme stocks may benefit so much from this goofy activity (I’m thinking Hertz, maybe GME) that they actually escape the black hole of management stupidity and bankruptcy.

      • Jon says:

        You forgot to mention what happened the day before this offering. You know, where they created the new investor connect network, offered free popcorn, all to run up the stock price only to do a offering the next day.

        • Javert Chip says:

          Jon

          I can’t tell is you’re serious or being sarcastic.

          In any event, I have no doubt AMC’s announcement of an “investor connect network” (whatever the hell that is), or the exquisitely explicit stock warning had any impact on the couple hundred thousand Reddit hive members who are playing this game.

    • Old School says:

      Cheap to no cost trades and advances in technology have allowed average peon to to play against professional gunslingers in the financial world. Most of us are horribly outgunned and overall will be carried out dead if we play that game long enough.

      Only advantage we have is being long term investors in my opinion as we can hold underperforming hand without getting fired unless we panic sell.

    • Auldyin says:

      BG
      I wondered that.
      Seems like the Wild West to me.
      I watched Peppard, Baker and Ladd in ‘The Carpetbaggers’ earlier today then checked out ‘the Street’ before supper.
      I thought I was still in the movie (age!).

  6. Randall Hooker says:

    There is a sucker born every minute.
    But with Reddit, the suckers are a trading block now. And they are being rewarded with the rising share prices based entirely on their buying activity.
    And when this dips they jack everyone up to buy more. At higher prices.

    A circle jerk. But this insanity persists.

    I am short a particular overpriced stock in an anemic market.
    And worry that these idiots could impose a short squeeze.

    What has the world come to?

    • 2banana says:

      There can only be a short squeeze if the stock you are talking about is already heavily shorted.

      • Javert Chip says:

        2banana

        Depends on what you mean by “short squeeze”. If Randall Hooker’s shorted equity all of a sudden goes up 2x (or 100x), Randall will experience a personal short squeeze even if he is the only one shorting the stock.

    • Lauren says:

      With all due respect Randall, if you short a stock and end up getting squeezed, that makes you the ‘idiot’ in this case. If the stock is GME, I wish you luck.

  7. Don says:

    Personally, I think AMC is ridiculously cheap. They’re a much better investment than BTC. They actually have some tangible assets backing their shares.

    • Javert Chip says:

      Are you referring to AMC’s commercial real estate in a few thousand cratering shopping malls?

      • Wolf Richter says:

        AMC’s real estate is collateral for loans. That RE essentially belongs to the lenders. And they’re going to get stuck with a lot of it.

        • Wes says:

          Mr. Richter, you finally got around to discussing SEC 13F’s. Don’t forget the form 4’s also.

    • Wolf Richter says:

      Don,

      What “assets” do they have?

      They have $3 billion in negative stockholder equity. If you remove “intangible assets,” their stockholder equity is negative $5.7 billion. This means that they have a lot more debt than assets. Have a look at their balance sheet. That’s why they were thinking about filing for bankruptcy last year.

  8. Anthony A. says:

    “They actually have some tangible assets backing their shares.”

    Empty theater buildings?

    • Jeremy Wolff says:

      sounds more like a liability

      • Anthony A. says:

        The loans are the liability. The buildings are hard assets, but many worth nothing or whatever one can sell them for. There is a new AMC theater a few miles from us that operated for a few months then was shut down.

    • Nathan Dumbrowski says:

      I am an AMC member and actually love it. $22/month and I get three movies a week. I sometimes get the theatre to myself. I see almost every single movie that comes out. Some are amazing gems, some are okay and occasionally there is a real walk out worthy “movie”. Never buy anything at concessions just go in scan my phone and walk to the theatre. I feel like I am taking advantage of AMC :)

      They even paused my membership the moment COVID hit which i thought was a nice touch

  9. Satya Mardelli says:

    The Reddit soyboys are fools. They buy OTM call options three days before expiry when the IV is over 400%. Then they sit back and chant moronic stuff like “to the moon!” over and over hoping to will the price higher for a quick win.

    They’re are going to make a movie about these idiots someday.

    • Jack says:

      It’s barking at the moon, i agree!

      But let’s consider this, why do “shorting a stock really exist?”

      To me it achieves No purpose, if the like of SEC or equivalent are doing their jobs “correctly “.

      I understand the need to challenge a publicly listed company’s assertion or claims of a product or service when declaring to the market, but this could be done in a verity of ways other than “ shorting the stock”!

      The bottom line is , everyone is a libertarian when it comes to “ fools losing their live savings in punting on fantastic claims made by various enterprises “, however I believe there should be a line drawn somewhere.

      If these red lines didn’t exist, we’d see charlatans and hucksters everywhere selling snake oil on every corner of every street in the nation!!??

      Oh boy , but there are hucksters and charlatans doing that already!!

      Where did we go wrong I wonder?

      • Seneca’s Cliff says:

        In the immortal words of Melissa Lee, CNBC news anchor, when surprised by a hedge fund guest who admitted they were shorting shares they did not own, or had not borrowed, “ Naked Shorts Yeah!”

      • Old School says:

        I don’t short. I think for average peon shorting and using leverage is too risky.

        I read an academic paper saying that in theory there should be more shorting as stock prices are just as likely to be too high as too low so it would make sense to have more shorts than actually occur.

        I think one foundation for long term investors is to never get yourself in a position that you are going to be forced to sell. Even now by some measures the overall stock market valuations has crossed 4 sigma levels and if we have blow off top may hit 5 sigma. The impossible seems to be possible in the stock market.

        The world is not even prepared for stocks to fall to 1 sigma below the mean long term value. Therefore Fed will try to prop market at all costs. Might not succeed.

    • MM says:

      I’m hoping to try my hand at this. How far OTM do they need to be?

    • MiTurn says:

      “Idiocracy?”

    • Javert Chip says:

      Satya Mardelli

      Soyboys, regardless how laughable their lifestyle, are neither “ignorant” (def: unaware of facts) or “stupid” (def: slow to learn).

      As members of the Reddit hive, they knowingly & willing use their small amount of capital (multiplied by a million other hive-members) to very effectively screw with & temporarily distort the system. Most don’t even expect to make money with this perfectly legal demonstration of “people power”.

      I’d guess most don’t view this as “losing money”; they see it as pure entertainment, sort of like paying a lot to go see a crappy movie & eat expensive popcorn.

      Sort of a capitalism-meets-Dobie-Gillis moment.

  10. Maf says:

    Wolf,
    Aren’t some/all of these part of 10b5-1 plans that were set up months earlier? If so, that’s not shady. If not, hope they have good insurance for the future securities litigation.

  11. Wellstone's Ghost says:

    If Gary Locke sold, then these shares will be toast at some later date. Gary is the consummate corporate insider. He hooked Boeing up something major when he was Governor of Washington. He is no fool.

  12. Dano says:

    A fool and his money…

  13. Ken says:

    Just sounds like Bitcoin – speculative greed.

    • Gk says:

      AMC shares can be printed… Bitcoin can’t. AMC has negative equity per share. Bitcoin doesn’t have a balance sheet

  14. Seneca’s Cliff says:

    I think the Apes have the Hedgies cornered in a box canyon. I think the best outcome would be for the banks, the DTC and the SEC to do a Bear Stearns on Citadel and let it collapse under the weight of its out-of-the-money shorts. This would give the Reddit crowd the justice they seek and give a lesson to those over using ridiculous short sales strategies. Then this episode could come to an end before it gets out of control.

  15. MCH says:

    WTF…

    You almost went a whole week without it. But it’s making an appearance again. YAYYYYYYYY

    Hmmm, just curious, if TSLA goes into the toilet, would it become a WTF chart?

    But at least one thing for certain, China Inc isn’t the sucker holding the bag, we know who the greater fool is. The retail investor.

    • Michael Gorback says:

      Elon Musk is a walking talking WTF, TSLA or no TSLA.

    • Wolf Richter says:

      TSLA has already been anointed with a “triple WTF chart of the year,” preceded by a “double WTF chart of the year,” preceded by, you guessed it, a “WTF chart of the year.”

      https://wolfstreet.com/2020/08/31/tesla-the-triple-wtf-chart-of-the-year-just-put-your-brain-on-tesla-autopilot-and-believe-in-it/

      I think I skipped the quadruple WTF chart of the year.

      ;-]

      • Michael Gorback says:

        Save it for when the space hotel opens.

        • Auldyin says:

          Incoming,incoming!
          Early WTF warning!
          Divided Airlines is going ‘supersonic’ by 2029, by utilising aircraft from a Denver start-up called ‘Doom’ which has yet to certify its product.
          Questions of ‘Concorde’ nearly bankrupting two nations were dismissed as old non-disruptiive technology. Watch Doom go Zoom.
          Probably DA as well. Sharpen your pencil W.

      • MCH says:

        There is always room for improvement.

        If it was anyone but Elon, it would be not such a big deal. It’s interesting, the guy has made great contributions to society and humanity, yet he cannot keep his own ego in check and his mouth shut.

        From the technology and impact point of view, he has contributed more than Jobs or Bezos IMO. The problem is that his ego is like double that of Gates, Jobs, and Ellison put together.

        • p coyle says:

          you’ve set a pretty low bar for elon when you compare his contribution to society to that of jobs, bezos, gates and their ilk. and to be honest, i’m not certain that he has cleared it.

          yeah, i’m a bit of a luddite.

  16. drifterprof says:

    Seems sort of like a Ponzi scheme where the people who are buying in, (Reddit crowd), are thinking they will have leverage to *force* more people to buy in (shorts).

    A Ponzi scheme where the grifters don’t have to hustle more buyers – they do it by force. “That’s a real nice house you have here. What a pity if it burned down.”

    • Robert says:

      I think all the shorts have covered already. New shorts may come if the price drifts up, but I think people have been properly schooled in what can happen if they mis-judge.

      It’s actually much safer to buy AMC than short it. You have your losses capped at zero price.

      • The Real Tony says:

        Your only hope when you buy it is to get out before they officially declare bankruptcy. I can only speak for Cineplex up in Canada, I shorted the stock after the announcement of the buyout from AMC. My betting was the deal would fall through even before anyone knew about Covid-19.

      • Phillip says:

        That’s not true see ORTEX and S3, you guys are clueless. What about Naked Shorts? No mention of this practice, how it’s illegal market manipulation. You better wise up or you’re going to be left behind, just ask Mr. Wonderful

  17. Martok says:

    Sure seems like they are partying like it’s 1999, as the song goes, and “Irrational Exuberance” on steroids rue the day, and I have seen this movie before.

    Those AMC clown exec “low-lifes” joking with the Reddit crowd and selling their stocks at the sametime is obscene, and I would have thought this violated some kind of regulation(s), what a colossal Pump/Dump, but it’s Reddit’s crowds money to do whatever they want with it, – beyond foolish.

    P.T. Barnum’s quote is still alive and well today about fools – and that Brooklyn Bridge has millions of new owners!

    The screwball Elon Musk’s influences on these meme stocks and Bitcoin is atrocious too, as he continues to flaunt even more SEC rulings.

    These HMS Titanic markets, and the madness, valuations, idiocy, etc, – will someday come to a epic end, and I saw that movie too, and there wasn’t a Part 2.

    Maybe the film of this era will be played in auctioned off remnants of AMCs theaters!

  18. David Hall says:

    I rented a streaming movie online for about half the price of a movie theater ticket.

    Most day traders lose. The market maker gets the bid – ask spread. Day trading is like a casino. A small percentage win. Invariably someone will guess right.

  19. YuShan says:

    These directors selling goes right against the interest of the company. The shares that they sold could also have been sold by the company itself and use it to improve their balance sheet.

    • Javert Chip says:

      YuShan

      We’re in new territory here: a wild & crazy Reddit hive infests your crippled company (in which insiders have invested significant potions of their net worth), and the stock goes bonkers for a few months.

      Not only can insiders get out, but cash also gets raised for the poor old balance sheet, which just might give the failed business plan & poor management a fighting chance to turn the ship around…or simply piss away more invested capital.

  20. Micheal Engel says:

    1) AMC daily with a cloud. A breakout and a test : shoot, shoot, shoot ==> for Reddit video games commando soldiers.
    2) It’s a game. It make sense, because it’s a game. Who cares about B&H for old. Once the bad guy was exposed (out of the cloud), they click their
    Berreta 22 and scream : move, move to the next guy. Results : AMC popped up like a rocket.
    3) Empty movie theaters belong to the lenders. To cut operation cost, marginal theaters are phased out. The “core”, the most important and prestigious theaters – will stay, until AMC cremation, in the next downturn.
    4) Less interphase for the BLM. Less violent movies theaters for the black crowd, is good for US.
    5) Hollywood lost it’s most important retail chain stores.
    6) Bending to BLM was a loser. Hollywood went to China.
    7) Hollywood depend on China. They moved in, but they cannot not get out. It’s another short term, desperate loser.
    8) It happened before, in Nazi Germany.
    9)

  21. Micheal Engel says:

    Coke, another loser.

  22. Xavier Caveat says:

    I’d expect AMC execs to create concession stocks where you can invest in $9 tubs of popcorn & $5 Cokes, to feverish demand on Reddit

  23. timbers says:

    Bit off topic, but many here will be interested.

    Google “UFO Reports Are Fertilizer For Military Budgets”

    America has had an eighth branch of the military since 2019 (Space Force) and it wants to be fed, and our corporate conglomerate media is happy to assist.

    • bungee says:

      i’ve been wondering why they’re trying to pull this trick. that makes plenty of sense. thanks.

  24. Micheal Engel says:

    1) The directors are smart. They squeeze as much juice as they can, selling stocks, before bk.
    2) Hollywood produced junk movies targeting the young crowd. The trained Rabbit commando shoot them in their back.
    3) China tamed US athletes and Hollywood. They are loud and aggressive in US, pussycats in China.

    • Nathan Dumbrowski says:

      There are several MAJOR movies about to be released. They will draw people back to the theatres I believe. That would be 007, an impossible mission, so Marvel magic just to name a few. People want to get out and be social like before the Pandemic. Nobody inside the buildings are wearing masks except the staff

      I believe movie theatres in 10 years will be changed and nothing like today. But the theatres still are the best experience to be had with a 100’+ screen

  25. Seneca’s Cliff says:

    You paper handers are spreading FUD!

  26. breamrod says:

    I think the fed wants to engineer a 5 to 10% market correction to calm all of this rampant speculation. Kind of blow the head off the beer so to speak. As Wolf has been reporting they are slowly withdrawing their accommodation .

  27. Micheal Engel says:

    1) Since covid is almost over, there will be only limited demand to expand retail stores or office “advance” cubical spaces. It will be difficult for lenders to unload their assets.
    2) That what happened to JPM in 2010. They opened new branched, because there were no takers to street level vacancies.
    3) Closing Main street to traffic street is nothing new.
    4) Some vacant movie theaters became covid centers. But since the
    pandemic is over, those popup might be gone like Xmas popups.
    5) Casinos replaced some vacant department stores spaces.
    6) The restaurants and the casinos are busy. But if the FANG pounding, real or FUD cont, It’s a bear market rally. A compromise on the 15% will humble them.
    7) SchumPeter stepping stone round #1.

  28. lenert says:

    No laws were broken in the making of this full-length feature presentation.

  29. Generally speaking when shares transfer from insiders (closely held) to widely held, the company has less “leverage” when dealing with shorts. However letting your defenses down isn’t necessarily a bad strategy, as long as there is someone who is squeezing the shorts, like the Reddit crowd (and you, or your debt underwriters couldn’t do it even while you had the float locked up). The end game here is to take the company private, which would justify the stock premium. Specs cash out at the top.

  30. The Real Tony says:

    Up in Canada Cineplex Corporation has about 50 weeks left before they go insolvent. AMC is in worse shape than Cineplex but for both companies its a sign of the times both should go bankrupt within two years from now. The fundamentals couldn’t have been worse for these two companies even before Covid-19. I know the company Cineplex inside-out from the day they IPO’ed at 5 dollars Canadian a share. Having worked for this company from day 1 I shorted the stock when it IPO-ed knowing everything behind the scenes (and all about Garth) as well as the 8 millimetre projectors. They’ll be no government bailout of this company and I doubt they can float any bonds or debentures in one years’ time.

    • Petunia says:

      Movie theaters are going through the same downward spiral as malls and for the same reason, crime. I stopped going to malls when I stopped feeling safe in them and I avoid theaters because the same crowd that can’t behave at the mall, can’t behave at the movies.

      I grew up going to the movies weekly, but now I would rather pay to premiere movies at home. Another industry destroyed.

  31. Micheal Engel says:

    1) No compromise on the 15% corp tax means : the republican party protect : FB, GOOGL, AMZN…their arch enemies.
    2) Milton Friedman and Anna Schwarz : preempt. Prick a bubble before it’s too late.
    3) A 62% retracement of 1929/32 was reached in 1946. 1929 peak was breached in 1954, 26 years later.
    4) Bubbles are serious matter. The roaring 20’s were actually frog cooking.
    5) 1921 was a deep recession. The DOW recovered in 1922, but dropped in 1924, to a higher low.
    6) Volatility led to tranquility and the tranquility period built a Lazer tilting up.
    7) In 1929 the DOW was rising vertically to escape the hot beam, peaking in Sept 1929. In Oct 1929 the DOW plunged inside the hot beam.
    8) There was an attempt to escape, but the DOW lost it’s grip, gap lower, accelerating downwards, gap < the Lazer, until it reached a support line from 1924, in 1932.
    9) JP, good luck !!
    10) If u fail, the FANG will blame u.

    • Putter says:

      Support for S+P should be found at 1500. The approximate 2000 and 2007 highs.

      • Old School says:

        Last time I did fair value of SP500 dividends I got about 1500 as a reasonable number.

        If you don’t believe Fed can create permanent free lunch, you have to ask yourself if Fed can permanently keep market valuations propped above long term mean value or if blowing a 4 sigma top doesn’t mean they will create a 4 sigma bottom at some point in time. Can you permanently print wealth? Don’t think so.

  32. Micheal Engel says:

    DOW, : bubble up/ bubble down, perhaps an inverse H&S : 2018 LS, 2020 H. Apr island 2020 RS. Thereafter, backup and a test.

  33. rcohn says:

    For those who think that this bubble can be blown up much further, I suggest that you study the Japanese market history.
    The Nikkei 225 index topped out in Dec,1989 at 38957 and never traded close to that number in the last quarter century , despite the very loose policy of the BOJ( even buying over 50% of Japanese ETFs) and budget deficits resulting in a budget/ gdp ratio of over 200%
    It’s currency did not collapse due to its trade policy of consistently running trade surpluses ( except for a few years).
    The Buffet index( total US stock market value/ gdp ) is at the highest level in history , the GINI index(a measure of wealth disparity) is close to its all time highs of the late 1920s and the number of large well known stocks with no earnings is at the highest in history.
    When the crash comes and history tells us that a crash is inevitable, there will be millions of angry investors who will feel betrayal by the financial industry
    The MEME stocks are the most recent example of super bubble stocks . Go into some of blogs and web sites where MEME stocks are discussed and notice one consistent theme – FUNDAMENTALS DO NOT MATTER. Those playing the MEME stocks seem to forget the one inviolate rule in momentum trading. Momentum is a double edged sword. What goes up often comes down .

  34. islandteal says:

    AMC….to sum it up.
    1. The stock is the product
    2. Movie content has become so bad that there is no real need for the actual theater

    AMC is just like most other Sillycon Valley Companies.

    • Petunia says:

      American movies are really terrible now. I’m rewatching old favorites.

  35. Rosebud says:

    Give me Liberty is a 2019 comedy made on the way to a funeral.

    Get it?

    Disclaimer, I have not seen this movie.

  36. Micheal Engel says:

    1) Japan miracle : 1945 – 1990.
    2) In the Plaza accord James Baker kicked Japan out of US Treasury.
    3) In 1985 Japan business investment was 18% of GDP. In 1990 it
    was 25%. Stuff people bought was : “made in Japan”. Japan took over the world.
    4) BOJ discount rate was 5% in 1985, but between 1987 to 1990 it
    was 2.5% because of money flow.
    5) In 1985 USDJPY was 350, but USD plunged to a selling climax @85.33 in Dec 1987.
    6) There was Oct 1987 “event” in US stock markets, but the NIKK
    didn’t care.
    7) The NIKK was vaccinated, Japan “just in time” became a bible.
    8) Since RE value was rising in Japan, the stocks of those who owned of the properties were rising too : the banks, insurance co, Toyota, other mfg….everything was melting up
    9) Expectations were high. 45 years after Hiroshima, Japan was invincible.
    10) In 1990 Japan introduced new restrictions on tall building. BOJ started tightening to slow business investments. In 1990 the discount rate was 6%….u know the rest.

    • Bead says:

      I remember lots of trophies. And nine of the ten largest banks in the world. Oh what it seemed to be!

  37. Plumbing says:

    Why worry about the stock sales by insiders when you get free popcorn?

    • Rosebud says:

      Moral hazard my flushing friend. That popcorn is free because the movie is astringent. Rather than being sweet, sour and salty, the market punks us with a pungent aftertaste. Excuse me while I join Hockney outside for a smoke!

      • Plumbing says:

        Rosebud

        Why is there moral hazard in this scenario? The people gambling on some of this nonsense will get wiped out and pushed out of the market. They won’t get bailed out.

        There have been bubbles and nonsense “assets” going parabolic throughout history. Pet rocks, tulips, and beanie babies come to mind. How many nonsense internet companies came to the market during the dotcom boom? Those companies went bankrupt and washed out from the market. Some people made money while others lost money. We shouldn’t regulate how people want to “invest.” The attention should be weeding out people and companies committing fraud.

    • Bead says:

      I don’t worry. I promise to down a couple toasts to the gamblers who lost. Nice foolish people.

  38. SpencerG says:

    I thought that insiders had to file a plan with the SEC for selling their shares. It can be triggered by date or price if I remember correctly.

    • Wolf Richter says:

      They don’t have to file a plan. They can sell anytime. But that opens them to allegations of insider trading. They can also file a plan just to make sure they stay clear of allegations of insider trading.

      • poe says:

        Somehow some of those 10b5-1 plans are so well timed.

        Btw Garcia II of carvana makes these AMC executives look like amateurs in terms of insider selling.

      • SpencerG says:

        Oh… OK. I suppose that they could sell them AFTER the corporate announcement was made in order to avoid an Insider Trading charge. Otherwise they would definitely be trading on insider information… even with a plan really.

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