Meet the Meme-Stock Movie's Latest Star

When you can't sell movie tickets or popcorn, try something new... The Merry Men of WallStreetBets... That, my friends, is how you meme stock... Meet the meme-stock movie's latest star... This movie has everything – action, comedy, a gold mine, and bankruptcy... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] When you can't sell movie tickets or popcorn, try something new... The Merry Men of WallStreetBets... That, my friends, is how you meme stock... Meet the meme-stock movie's latest star... This movie has everything – action, comedy, a gold mine, and bankruptcy... --------------------------------------------------------------- AMC Entertainment (AMC) is terrible at selling movie tickets and popcorn... But I (Dan Ferris) must admit... it's great at making its own movie. As you all know by now, AMC was [one of the Great Meme Stocks of 2021](. A bunch of big hedge funds bet against the fledgling movie-theater chain's stock. AMC couldn't afford to pay its bills. So they were sure its stock was on a one-way trip to zero. Then, a scene straight out of "Robin Hood: Baron of Meme Stocks" unfolded... A swarm of Merry Men investors invaded the WallStreetBets board on social media website Reddit in early 2021. In a quest to defeat the Sheriffs of Nottingham of the financial world, they banded together and started pumping up AMC's stock (and others like it). The Merry Men of WallStreetBets succeeded beyond their wildest dreams... AMC's stock traded for around $2 per share to begin 2021. It closed at $62.55 per share on June 2, 2021. It was a nearly 30-fold increase, most of which took place over a couple weeks in late May and early June. Just look at AMC's chart over that period... AMC's market cap started 2021 at $434 million. And in early June, it peaked at more than $31 billion. For a while, it seemed like the Merry Men of WallStreetBets really knew how to build wealth. But of course, we all know how the next scene of this movie played out... As a business, AMC hasn't made any money since 2018. And now, its stock has crashed almost straight down for nearly two years. It probably bankrupted many of the Merry Men. But that doesn't mean it's time for the credits to roll on AMC's movie... For better or worse, AMC's management team is the star of this movie... When you're in charge of a meme stock, it's your job to make sure you wring every penny out of its unwitting shareholders. And that's exactly what AMC's leaders keep doing... One of the best ways to do that is to issue a lot of stock as the meme-stockers run its share price up because they think they'll get rich quick with zero effort or knowledge. And during the stock's meteoric rise in 2021, AMC fleeced its shareholders in award-winning fashion... As AMC's share price soared from around $2 to more than $62, company management sold more and more shares. Ultimately, AMC's share count surged nearly 10-fold – from less than 58 million in October 2021 to about 517 million in March 2022. That wasn't good for the Merry Men of WallStreetBets. Every piece of the company they owned prior to that epic run was now an ownership stake representing an 89% smaller piece of the company than before. Awesome job, guys. But we've just talked about the regular common shares so far... By August 2021, AMC issued all the new common shares that its charter allowed. The company's shareholders wouldn't let management increase the maximum number of shares. So management decided to film a scene for "Planet of the APEs: Meme Stocks Unite"... In short, it made up a new share class known as AMC Preferred Equity ("APE") units. I won't get into the nitty-gritty details, but APEs are just common shares in disguise. AMC issued the first 517 million APEs free to existing holders of its common shares. Since then, it has sold roughly 412 million additional APEs. So if you're keeping track at home... Between common shares and APEs, AMC sold more than $1.8 billion in new equity in 2021 and around $1 billion in 2022. That's more than $2.8 billion in total proceeds by selling worthless paper to naive fools. That, my friends, is how you meme stock. (On March 14, AMC's shareholders voted to convert their APEs into common shares and to consolidate all shares at a ratio of one new share for every existing 10 shares. That hasn't happened yet. But when it does, AMC's official share count will be about 156.3 million.) AMC took nearly $3 billion out of the pockets of the world's most naive shareholders... That looks bad on its own. But at least theoretically, AMC's management could do something good with the money. It could use it to create solid value for shareholders and give its own movie a happy ending. For example, the company could pay down a big chunk of its debt... AMC had $5.9 billion in debt at the end of 2020. Today, it has roughly $5.2 billion in debt. Paying down $700 million in debt is a good move. But it probably won't be enough... AMC still has way too much debt. Its annualized interest expense is still around $400 million these days. A business in a dying industry can only afford to pay that much for so long. Plus, AMC's management must've realized that paying off debt was far too boring for its own movie. So it decided to jazz things up and turn it into an action-packed thriller... You see, AMC management has also dabbled in investing the money – starting with gold mining... Yes, really. We covered all the details in [our March 18, 2022 Digest](. But here's a quick recap... On March 15, 2022, AMC announced that it had spent nearly $28 million to buy 22% of Hycroft Mining (HYMC). The Denver-based company owns the Hycroft Mine in Nevada. Canadian mining investor Eric Sprott made an identical purchase at the same time. Before we move on, I need to tell you... Hycroft Mining shut down the gold mine and laid off half its workforce in November 2021. That might sound troubling to you. But to AMC management, it's just a minor plot twist. And it gets worse... I asked a couple of very knowledgeable mining investors about the Hycroft Mine's potential. They suggested that it might be able to produce gold at a profit if the precious metal's price reached $2,500 per ounce. So far this year, gold is on the upswing again. It's up more than 20% since last November. But notably, it's still only selling for around $2,000 today. That means the Hycroft Mine isn't worth restarting today. And frankly, it might never restart. Maybe AMC management will make that cliffhanger a major part of the sequel. AMC paid $1.07 per share for its portion of Hycroft Mining. And Hycroft Mining's stock trades at around $0.55 per share today. So AMC is down about $14 million on its $28 million investment. Hycroft Mining could be a great investment for a big mining company... The company controls a huge gold deposit. And gold prices aside, it's full of potential... According to Hycroft Mining, the property is bigger than Manhattan. But only 5% of it has been explored. And it's in Nevada. That's one of the best places on the planet to mine gold. So even if gold doesn't eclipse $2,500 per ounce, some potential does exist. That is, if... - You know what you're doing, - You have billions of dollars and a few decades to restart the mine, - You can run it profitably, - You can deal with all the unforeseen problems that plague every big mine, and - You can expand production through further exploration. Mining is the world's most capital-intensive business. AMC's management isn't the right fit... A gold mine is a lousy investment for a dying, cash-burning movie-theater operator. These folks know nothing about gold mining. And they already have enough problems in their own backyard. So when I say Hycroft Mining is a lousy investment, it doesn't mean I think it's bad for everyone. It just means AMC has no business putting a dime of its shareholders' money into the mine. Now, it's bad enough that AMC knows nothing about gold mining. Judging from the past few days, it seems like AMC doesn't even know anything about its own industry... On Monday, AMC alerted the U.S. Securities and Exchange Commission ("SEC") about its latest investment. In short, the company reported that it had recently bought 9.1% of the outstanding shares of National CineMedia (NCMI). AMC is now the largest shareholder of that business. This investment makes sense at first glance... National CineMedia sells advertising on movie-theater screens. It's responsible for the stuff that plays on the big screen before the movie starts and on video screens in theater lobbies. And of course, AMC management should understand this business better than all of us... Like AMC, National CineMedia isn't doing well. But we can only assume that AMC knows movie-theater attendance won't likely ever fully recover from the COVID-19 devastation. And it must know that movie-theater advertising is dying faster than its own business... Plus, anybody can check National CineMedia's SEC filings. If you do, you'll learn that the company has reported more than $138 million in net losses over the past three years. The best days for National CineMedia's stock are long gone. It traded for around $10.69 per share in September 2018. When AMC announced its stake Monday, it traded for about $0.13 per share. That's all public knowledge. Anybody could figure that out – even AMC management. What we don't know is whether or not AMC saw the next scene of its own movie coming... On Tuesday, the day after AMC disclosed that it now owns 9.1% of the company... National CineMedia filed for bankruptcy protection. Forget an action-packed thriller. AMC's movie is clearly a classic slapstick comedy... AMC management set off on a noble quest to buy a related business. It planned to march confidently into the future... and immediately stepped on a rake and broke its nose. Before AMC announced its stake, National CineMedia was a tiny stock on the verge of getting delisted from the Nasdaq. Its market cap had fallen to around $20 million. If National CineMedia would've declared bankruptcy without AMC owning its shares, we might've never noticed the story. But remember, AMC is great at making its own movie... By the end of the day Tuesday, National CineMedia's stock had climbed to $0.21 per share. That's a roughly 60% gain in a single day. But it's just a little meme-stock mojo from AMC. No big deal. The real magic happened Wednesday, the day after National CineMedia declared bankruptcy... The stock soared as high as $0.65 per share that day. That was 400% above its closing price on Monday. And it closed at $0.44 per share – nearly 240% above Monday's close. Now we're talking. That, my friends, is how you meme stock. Of course, that's still not as good as what AMC did to Hycroft Mining over the first few days... Hycroft Mining traded at around $0.30 per share when AMC invested in the company. Roughly a month later, it was at $2.59 per share – a 760% rise! That's a classic meme-stock run. To be fair, National CineMedia could still be on the verge of an even bigger, more manic run-up... After all, meme-stockers love garbage. And AMC combined with bankruptcy is garbage squared. The share-price histories of AMC and Hycroft Mining suggest that a full meme-stock run takes about a month. And National CineMedia has only been a meme stock for a few days. By the second week of May, it could be a 10- or 20-bagger. A month in the meme-stock world is like 10 years in the real world. If we were living in the real world, National CineMedia's share price would've gone to zero (or at least close to it) as soon as it filed for bankruptcy protection. But the meme-stock world doesn't make sense... so National CineMedia could soar "to the moon" from here. Just so we're clear... I would never touch National CineMedia's stock with real money. And you shouldn't either. But if you do, I hope you understand that you're lighting money on fire. It's worthless. And it should be avoided. Except that, well... National CineMedia's stock might not be worthless... The meme-stock phenomenon – including bankrupt companies – has shown the world a textbook case of "reflexivity." That's an idea in 92-year-old investing legend George Soros' classic book, The Alchemy of Finance. He's a terrible writer. But the ideas within the book aren't bad... Reflexivity is simple to understand. It means that the market influences business and economic fundamentals at least as much as the fundamentals influence the market. AMC is a great example of reflexivity... The movie-theater industry has been shrinking for decades – probably longer than you think. Attendance as a percentage of the U.S. population has dropped since the 1940s. Back then, more than 60% of the country went to the movies once a week. That figure fell to less than 10% by 1964. So the industry was already in a long, irreversible decline before the COVID-19 lockdowns delivered the deathblow in 2020. AMC's closing share price peaked in 2015. And it had fallen nearly 95% by January 5, 2021. It was a money-losing, highly indebted company headed for bankruptcy. Again, that's why so many investors were selling it short. Then, it went into meme-stock mode. If AMC hadn't become a meme stock, it likely would be bankrupt. But even though its stock is down about 90% from its meme-stock high, it's still much higher than before it went into meme-stock mode. If AMC didn't become a meme stock, management would've had a hard time raising any money. And with a market cap below $500 million, it definitely wouldn't have raised more than $2.8 billion. But AMC isn't bankrupt and has raised all that money for one simple reason... Meme-stockers kept believing they could push its share price to the moon and keep it there... I'm certain most of the meme-stockers who bought AMC's shares have lost money. That's just the way these things go. But I have to give credit where it's due... They changed AMC's destiny. And their actions might've changed the fates of two other companies, too – Hycroft Mining and National CineMedia. Would Hycroft Mining's share price be higher today than it was before AMC bought shares if only Eric Sprott had invested at that time? Maybe, but I doubt it. Eric is widely respected. He's a star in the world of natural resources. But in this movie, even he can't compete with the clout of a swarm of Merry Men meme-stock buyers. And now, AMC has brought National CineMedia into its meme-stock movie... Because of that, some hope exists for the now-bankrupt company. There's at least a chance that National CineMedia can raise enough money to keep its stock from becoming totally worthless – which is the typical outcome in a bankruptcy. National CineMedia is now in touch with the meme-stock mob. That might wind up helping it survive longer – and it might mean that AMC's investment isn't actually worth zero yet. I'm not saying that it's likely. It's not likely at all. But it's not off the table anymore. The meme-stockers swung several companies' share prices in recent years. That changed their market valuations. The much higher valuations enabled them to attract more money. This money is keeping them alive for another day. They're like movie characters who won't die. And before you know it, we'll be watching the fifth and sixth sequels of AMC's movie. The meme stocks and all their cousins (like Hycroft Mining and National CineMedia) probably should go bankrupt and disappear. That way, no more capital would get wasted. But that kind of movie wouldn't be as much fun to watch. --------------------------------------------------------------- Recommended Links: [Here's What You Missed Yesterday (Big Retirement Update)]( It's a rare opportunity to now start collecting cash yields of 14% or more in this volatile market... set yourself up for a series of cash yields as high as 29% going forward... and potentially see hundreds of percent in capital gains longer term... all with LESS RISK than you might think possible. Plus, there's a BIG reason why today may be the best time in 10-plus years to deploy this little-known strategy. [Click here to tune in now](. --------------------------------------------------------------- [Wall Street Legend Issues 90-Day Stock Alert]( The countdown just started on the biggest stock market event of 2023. And according to one Wall Street legend with 50 years of experience, you now have just 90 days to prepare and move your money. [Click here to learn more](. --------------------------------------------------------------- New 52-week highs (as of 4/13/23): Alamos Gold (AGI), AutoZone (AZO), Sprott Physical Gold and Silver Trust (CEF), Copart (CPRT), iShares MSCI Mexico Fund (EWW), SPDR EURO STOXX 50 Fund (FEZ), SPDR Gold Shares (GLD), Eli Lilly (LLY), McDonald's (MCD), Madison Square Garden Sports (MSGS), Motorola Solutions (MSI), Novo Nordisk (NVO), Novartis (NVS), O'Reilly Automotive (ORLY), Flutter Entertainment (PDYPY), Sprott Physical Gold Trust (PHYS), Stryker (SYK), Torex Gold Resources (TORXF), Unilever (UL), Visa (V), Wheaton Precious Metals (WPM), and Zymeworks (ZYME). Today's mailbag includes feedback on a comment [in yesterday's mailbag](... and a note of gratitude for Dr. David "Doc" Eifrig's latest research. What's on your mind? As always, you can send your thoughts and comments to us at feedback@stansberryresearch.com. "In response to subscriber K.M.'s comment [in yesterday's Digest ] that recessions impact primarily on unemployment is a 'societal choice,' I'm sure it generated a deluge of outrage from most readers, but I would like to offer a sincere 'attaboy' for presenting an alternate point of view worthy of contemplation. In support, I offer the following: it's widely accepted that the consumer makes up [about] 70% of 'the economy', so where is the logic in suppressing that 70% when times get tough? As a died-in-the-wool capitalist, I present Exhibit A: Henry Ford – who was astute enough to know that the path to success was paying his workers enough to afford his product." – Stansberry Alliance member Murph "Doc! Many thanks for today's Income Intelligence issue. It was the 12% Letter that got me started with Stansberry Research, and it's the type of investing my father has been emphasizing [for most of his 98 years]. I am the youngest of four, and he sat me down when I was a kid to explain compounding interest, hoping that at least one of his kids would 'amount to something.' I may be paraphrasing, but that's how I remember it. To do things correctly, you have to get the fundamentals right, and you explain the fundamentals so well. I appreciate all of your hard work. Cheers!" – Paid-up subscriber B.T. Good investing, Dan Ferris Eagle Point, Oregon April 14, 2023 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,047.7% Retirement Millionaire Doc MSFT Microsoft 02/10/12 902.1% Stansberry's Investment Advisory Porter ADP Automatic Data 10/09/08 781.2% Extreme Value Ferris ETH/USD Ethereum 02/21/20 690.3% Stansberry Innovations Report Wade HSY Hershey 12/07/07 622.2% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 552.6% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 463.9% Retirement Millionaire Doc AFG American Financial 10/12/12 412.8% Stansberry's Investment Advisory Porter ALS-T Altius Minerals 02/16/09 330.0% Extreme Value Ferris FSMEX Fidelity Sel Med 09/03/08 321.4% Retirement Millionaire Doc Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 Extreme Value Ferris 1 Stansberry Innovations Report Wade --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst ETH/USD Ethereum 12/07/18 1,531.9% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,192.4% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,054.4% Crypto Capital Wade MATIC/USD Polygon 02/25/21 928.2% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 708.8% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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