Higher Meme Inventory: AMC Leisure or Tilray?

2021 could one day go down in investment history as the year of meme stocks. Several stocks have gone viral online in the past few months. Their popularity on the internet has resulted in huge profits.

AMC entertainment (NYSE: AMC) and Tilray (NASDAQ: TLRY) stand out as two very different meme stocks that have garnered a lot of attention this year. AMC was a short press Game a few months ago that roared back after a temporary lull. Its stocks are up more than 2,500% since the start of the year. Tilray enjoyed a big run up earlier this year as investors awaited the merger between the company and Aphria. The pot stock is still up nearly 190% after giving up some of its previous gains.

Which of these two meme stocks is a better choice for investors? This is how AMC and Tilray face each other.

Image source: Getty Images.

Financial condition

AMC had revenue of $ 148.3 million in the first quarter of 2021, down 84% year over year. This is not surprising when you consider that the COVID-19 pandemic had devastating consequences for the cinema operator. It’s also no surprise that AMC posted a large net loss of more than $ 567 million in the first quarter. Even before the pandemic, AMC was not consistently making profits.

However, AMC has maintained a strong liquidity position thanks to several equity and debt increases. As of March 31, the company’s cash on hand was just over $ 813 million, excluding $ 29 million of locked cash. Since then, AMC has strengthened its liquidity position through additional stock offerings.

Tilray’s exact financial position is a little more difficult to pin down because of the Aphria merger. Both Aphria and Tilray saw year-over-year revenue growth in their most recent quarterly updates. Both companies also achieved positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

Aphria’s cash and cash equivalents as of February 28, 2021 were CAD 267.1 million. Tilray had a cash position of $ 261.3 million in all-stock transactions as of February 16, 2021.

rating

We cannot use earnings-based valuation metrics at AMC as it is not profitable at this point. However, the stock is currently trading at more than 20 times its last 12-month sales. Meanwhile, Tilray is trading a little over nine times after 12 month sales.

However, using a different metric gives AMC the advantage. Shares in the theater chain only trade at 0.18 times book value. Tilrays Price-to-book ratio is 6.7.

However, both valuation metrics have disadvantages. Historical sales used for trailing P / S multiples can be misleading. This is particularly the case with the COVID-19 pandemic, which affects both AMC and Tilray. The price-to-book ratio is also problematic due to the high level of goodwill that both companies have on their balance sheets.

Growth prospects

Arguably the most important factor in choosing between these two stocks is their growth prospects. However, this is also the most difficult area to assess.

There’s no question that AMC should bounce back in 2021 and beyond. The stock might even got a huge catalyst on the way when studios give up their efforts to debut films on streaming services in favor of showing new films in theaters.

Tilray could face significant challenges in the Canadian cannabis market this year due to price pressures. On the other hand, the lifting of pandemic restrictions could pave the way for stronger sales growth for the company’s cannabis products in Canada and Europe, as well as its hemp products in the United States

What do analysts think of the growth prospects for each of these companies? The advantage is clearly with Tilray. Analysts are forecasting average annual earnings growth of nearly 50% for Tilray, while anticipating deteriorating earnings for AMC after the next year.

Better meme stock?

In my opinion, AMC could still be the bigger winner in 2021. However, in the long run, I think Tilray’s chances are likely to be better.

In particular, I expect the U.S. cannabis market to open up to Canadian companies in the not too distant future. This will be a tremendous opportunity for Tilray.

The company already operates Manitoba Harvest, the largest producer of hemp foods with significant US sales. It also operates Sweetwater Brewing, a beer maker focused on cannabis lifestyle brands. Tilray believes these companies will provide him with a solid platform for the U.S. cannabis market.

While I nod my head to Tilray long-term, I think there are other stocks out there that offer better risk / reward ratios than Tilray or AMC. These stocks might not be internet memes, but they do have strong financial positions, attractive valuations, and great long-term growth prospects.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

GameStop, AMC Leisure Shares Soar as Meme Inventory Rally Returns

The meme stocks are back.

Stocks of companies that upset the stock market and social media earlier this year are bouncing again this week, rewarding individual investors who have held on for months.

GameStop Corp.

GME 14.88%

,

AMC Entertainment Holdings Inc.,

AMC 19.25%

and

express Inc.

have all risen more than 36% for weeks, bringing every stock to levels not seen in weeks – or in some cases months -.

The sudden increase is reminiscent of the end of January, when individual investors join forces To drive stocks of companies once believed dead by Wall Street to unprecedented heights. This week’s rally – though tamer by comparison – has lit up Reddit forums, Discord chat rooms, and the like

Twitter

Feeds.

Much like previous rallies among meme stocks this yearNo unique or clear catalyst appeared to be driving this week’s rally. Analysts said the jump was likely due to a number of factors that have caused individual traders to pile up. With cryptocurrencies having lost much of their steam this monthMany unprofessional traders have come back on the stock market in search of profit. Platforms like Reddit’s WallStreetBets forum have kept the buzz, especially with meme stocks.

“We’ve seen things get out of hand for the last month or so, but it’s starting to pick up again,” said Viraj Patel, global macro strategist at Vanda Research.

Data from VandaTrack shows that individual investors invested more than $ 22 million in AMC on Tuesday, more than double the average daily net inflow of around $ 9 million into the stock of around $ 9 million in 2021. The company’s share price traded above $ 19 on Wednesday afternoon, causing it to potentially close above the highs reached during the January meme stock rush.

Part of the excitement is the belief of individual investors that meme stocks like AMC and GameStop can rise “to the moon” again. Many have spent months monitoring bearish positions in the stocks in hopes of repeating the frantic surge in stocks earlier this year. At its peak earlier this year, GameStop shares rose to $ 483 for the day from less than $ 20 at the start of the year. It was trading at $ 240 on Wednesday afternoon, up 15% for the day.

The January rally was caused in part by brief pressure. Investors bet against a company by borrowing and selling stocks and betting that they can later buy them back at a lower price. Brief pressure occurs when the price rises instead, forcing those with short positions to buy stocks to limit their losses, resulting in further price gains.

Prior to the January rally in meme stocks, hedge funds and other institutional investors were betting that stock prices for companies like GameStop would continue to fall. Instead, they were punished with heavy losses when meme stocks began to rise.

Individual investors on social media hope to find institutional investors back on the wrong side of the trade. According to S3 Partners, short interest in AMC is currently close to 21% of the stock’s free float, down from a 2021 low of nearly 11% in March, but up from the 28% hit earlier this year. GameStop’s short interest is around 20% compared to more than 140% in January.

The recent rise in stocks suggests that another short squeeze could be possible, especially if short sellers lose conviction or if their losses increase, said Ihor Dusaniwsky, head of predictive analytics at S3 Partners. As early as this week, investors who had bet that GameStop and AMC shares would fall would have seen bigger losses than normal, he said. Those short in GameStop lost at least $ 692 million on Tuesday and Wednesday, data from S3 Partners shows. Short sellers betting against AMC lost at least $ 482 million over the same period.

“Both stocks currently have very high short squeeze potential,” said Dusaniwsky.

However, some analysts doubt that social media momentum can boost stocks as much as it did earlier this year. Inflows into meme stocks like AMC also remain a fraction of what was previously seen.

“The crowd will be disappointed with the potential returns. Mania takes a lot of momentum, ”said Peter Atwater, associate professor of economics at the College of William & Mary. “You may try, but I would be surprised if you could create the kind of organic crowd behavior that you had before.”

Another force behind GameStop’s rise could also be speculation about the video game retailer’s foray into another area of ​​booming online speculation –the market for digital collectibles known as non-fungible tokensor NFTs. A subdomain for “GameStop NFT“Posted recently on the company’s website and sparked speculation that GameStop may have its own suite of digital assets that users can buy and sell. GameStop did not immediately return requests for comments.

So-called NFTs have become increasingly popular this year, especially for owning digital collectibles such as works of art, music and sporting highlights. These tokens accompany digital assets and live on the blockchain, a digital ledger that records who they belong to, who created them, and other vital information.

NFTs have become popular in video gaming as a way of allowing players to have buildings, avatars, or game accessories, rather than essentially leasing them from a platform. Players hope that the items they purchase can be used on many gaming platforms, rather than just one.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Caitlin Ostroff caitlin.ostroff@wsj.com

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Sen. Bernie Sanders is utilizing his inauguration meme to lift cash for charity

Vermont Senator Bernie Sanders uses his internet fame from his inaugural meme to raise money for charity.

The senator continues to sell sweaters his campaign website with the picture of him sitting in the audience at the inauguration in a mask and mittens that went viral earlier this week. The sweaters are $ 45 each and are small to twice the size.

The downside is that they are currently sold out. And if you’ve been lucky enough to snag one, it could take anywhere from four to eight weeks to get you due to the overwhelming demand.

The good news is that all proceeds from the sale of sweaters will be donated to Meals on Wheels Vermont, according to Meals on Wheels Vermont Sanders’ website.

Bernie’s meme went viral for the first time on Wednesday, and the internet began photoshoping the Senator under various circumstances.

Even some of San Antonio’s landmarks, restaurants, and universities joined the social media trendand people love it.

You can find more information about the sweaters at Click here.

ALSO READ: San Antonio’s Best Bernie Sanders Memes After The Housewarming Photo Go Viral

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