Mega-cap technology firms created 2023’s supposed stock market rebound. Without it, the S&P 500 is only up in the single-digit percentage. Small-cap firms and the ETF (IWM) tell a different tale. IWM is down 3% YTD.
Bears should look for broken businesses in seeking trading profits. AMC Entertainment (AMC) is one of such firms. After diluting “ape investors” with APE preferred equity, the firm raised more funds by selling $350 million worth of shares.
On Nov. 9, 2023, the movie theatre firm filed the stock sale after posting Q3/2023 results. Despite reporting revenue jumping by 45.2% Y/Y to $1.41 billion from Barbie and Openhemier, it lost 9 cents a share. This is better than its $2/share loss last year.
Movie attendance is still weak. Attendance at the domestic box office is still 16% lower than comparable pre-pandemic 2019 levels.
AMC’s 30 million share sale for $10 each gives bears a chance to bet against the firm. Puts from the derivative market will increase in value every quarter, like clockwork. The firm cannot record a profit at its pace of revenue growth. As it burns cash, it will run out of money when the market is not receptive to its stock sale.
Bet on AMC at prices below $10.00.