DrDawkinstein Posted June 3, 2021 Share Posted June 3, 2021 20 hours later: OMG AMC part 2 - Nosedive Boogaloo Quote Link to comment Share on other sites More sharing options...
Doc Posted June 3, 2021 Share Posted June 3, 2021 And now it's back up again... Quote Link to comment Share on other sites More sharing options...
DrDawkinstein Posted June 3, 2021 Share Posted June 3, 2021 1 hour ago, Doc said: And now it's back up again... Word is it tanked because AMC announced it was selling off 10M shares first thing this morning. But imo, that shouldnt cause the price to drop since it means (just like GameStop did), they now get a big injection of cash to pay off debts and stay afloat. This move will only make them stronger as a corporation. Maybe it was just the volume that caused the dip? Not sure the ~$60 price is sustainable. As noted, that price makes AMC "worth" more than most companies in the S&P500. So much is so overvalued right now. Makes me nervous. (Looking at you, TESLA!) 1 Quote Link to comment Share on other sites More sharing options...
DrDawkinstein Posted June 8, 2021 Share Posted June 8, 2021 Go GME, Go! Quote Link to comment Share on other sites More sharing options...
Jauronimo Posted June 8, 2021 Share Posted June 8, 2021 On 6/3/2021 at 2:03 PM, DrDawkinstein said: Word is it tanked because AMC announced it was selling off 10M shares first thing this morning. But imo, that shouldnt cause the price to drop since it means (just like GameStop did), they now get a big injection of cash to pay off debts and stay afloat. This move will only make them stronger as a corporation. Maybe it was just the volume that caused the dip? Not sure the ~$60 price is sustainable. As noted, that price makes AMC "worth" more than most companies in the S&P500. So much is so overvalued right now. Makes me nervous. (Looking at you, TESLA!) TSLA is changing the world and energy sector. AMC is a relic from the golden age of brick and mortar retail. One of these things is not like the others. 1 Quote Link to comment Share on other sites More sharing options...
DrDawkinstein Posted June 8, 2021 Share Posted June 8, 2021 27 minutes ago, Jauronimo said: TSLA is changing the world and energy sector. AMC is a relic from the golden age of brick and mortar retail. One of these things is not like the others. (Stealing most of what follows from other posts and articles) Tesla is also way overvalued, and isnt turning big profits like a lot of other well established companies. That is what prompted Michael Burry's $530M Tesla short. It isnt so much against the company, but knowing that when interest rates inevitably go up, Tesla will be one of many companies hit hard (at least in its stock value). Growth companies, however promising, have most of their expected profits in the future. Those profits have to be discounted by the interest rate to be turned into todays dollars. In other words, it doesn't matter how much money Tesla is going to make in the future if interest rates surge today. Well... it does matter... it's just worth a lot less. So how does this relate to the Burry bet? You just have to scroll down a few lines on his 13F filing. Burry has almost as many GOOG/FB calls as he does TSLA puts. Around ~$330MM of them. Why does this matter? These are big tech companies that are actually printing out metric *****-tons of profit today. Interest rates stay the same but big tech goes up? Break even. Big tech goes down? Break even. Interest rates rise? Burry makes more money in a year than all of your wives boyfriends combined. Quote Link to comment Share on other sites More sharing options...
Jauronimo Posted June 8, 2021 Share Posted June 8, 2021 1 minute ago, DrDawkinstein said: (Stealing most of what follows from other posts and articles) Tesla is also way overvalued, and isnt turning big profits like a lot of other well established companies. That is what prompted Michael Burry's $530M Tesla short. It isnt so much against the company, but knowing that when interest rates inevitably go up, Tesla will be one of many companies hit hard (at least in its stock value). Growth companies, however promising, have most of their expected profits in the future. Those profits have to be discounted by the interest rate to be turned into todays dollars. In other words, it doesn't matter how much money Tesla is going to make in the future if interest rates surge today. Well... it does matter... it's just worth a lot less. So how does this relate to the Burry bet? You just have to scroll down a few lines on his 13F filing. Burry has almost as many GOOG/FB calls as he does TSLA puts. Around ~$330MM of them. Why does this matter? These are big tech companies that are actually printing out metric *****-tons of profit today. Interest rates stay the same but big tech goes up? Break even. Big tech goes down? Break even. Interest rates rise? Burry makes more money in a year than all of your wives boyfriends combined. Tell me what stocks do well when interest rates go up?? Maybe some financials but there is an inverse relationship between market returns and rates. All companies are valued on forward looking metrics. Those profits are discounted by the appropriate discount rate which is not the interest rate, by the way. In fact for some big tech companies, most of which are 90% or more equity in their cap structure, rising interest rates have very little affect on the company's WACC/cost fo equity. I can assure you that I do not need any lessons in discounted cash flow analysis. The real pressure from rising rates is that the whole market is currently propped up on cheap debt and cheap margin. A hint of rising rates sparks a move from speculative investments to safer harbors. According to the experts TESLA has been overvalued for going on a decade. As to if its more overvalued than AMC I would just say that if I had to bet as to which has more staying power: Musk's vision and drive OR the attention span and commitment to HODL of autists, I'm taking Elon all day. Quote Link to comment Share on other sites More sharing options...
DrDawkinstein Posted June 8, 2021 Share Posted June 8, 2021 7 minutes ago, Jauronimo said: Tell me what stocks do well when interest rates go up?? Maybe some financials but there is an inverse relationship between market returns and rates. All companies are valued on forward looking metrics. Those profits are discounted by the appropriate discount rate which is not the interest rate, by the way. In fact for some big tech companies, most of which are 90% or more equity in their cap structure, rising interest rates have very little affect on the company's WACC/cost fo equity. I can assure you that I do not need any lessons in discounted cash flow analysis. The real pressure from rising rates is that the whole market is currently propped up on cheap debt and cheap margin. A hint of rising rates sparks a move from speculative investments to safer harbors. According to the experts TESLA has been overvalued for going on a decade. As to if its more overvalued than AMC I would just say that if I had to bet as to which has more staying power: Musk's vision and drive OR the attention span and commitment to HODL of autists, I'm taking Elon all day. My man, you're making a bunch of arguments that I either agree with, or never said otherwise. My point this entire time (well, the last 3-5 posts at least) is that the ENTIRE market is way over valued, and propped up not only on cheap debt and cheap margin, but by a $1.5Trillion cash injection and even more retail cash being pumped into it. Whole thing seems very flimsy right now, like it's on the edge of a correcting crash any moment. That applies to AMC and Tesla, not either/or. And sure Tesla is more likely to survive given their business model vs AMC, but they are both equally at risk (if for different reasons). Quote Link to comment Share on other sites More sharing options...
sherpa Posted June 8, 2021 Share Posted June 8, 2021 On 6/3/2021 at 3:03 PM, DrDawkinstein said: Word is it tanked because AMC announced it was selling off 10M shares first thing this morning. But imo, that shouldnt cause the price to drop since it means (just like GameStop did), they now get a big injection of cash to pay off debts and stay afloat. Because stock is ownership. If you issue more stock, you dilute the value of existing shares, thus reducing their value. Stock issuance dilutes value, stock buybacks enhance it. 1 Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.