One of AMC Entertainment’s most ardent private investors is playing the long game of stocks, but sees stocks return to earth before the end of the year.
Trey Collins, 23-year-old host of Trey’s Trades channel on YouTube, said on CNBC’s “Squawk Box” Friday morning that he believes the fundamental value of AMC stock will be at $ 20-25 a share by the end of 2021 will lie.
“I think most retail investors understand that this is not the true fundamental value of AMC,” said Collins.
The company’s shares hit an all-time high this week, hitting $ 72.62 before pulling back. The company’s shares rose about 2% during intraday trading, last trading at about $ 52.
“Just because the stock market is telling you exactly what every single security in the market is worth at that point in time, if there’s someone willing to buy AMC stock, which trades for $ 47, that means that it’s worth $ 47, ”he said. “The momentum trading aspect, while not necessarily reflected in current earnings or future expected earnings, does not mean there is no money to be made.”
Collins uses social media to document his investments in the stock market and has become the de facto go-between between AMC and its largest shareholder base, the Monkeys. Collins interviewed AMC CEO Adam Aron twice, including Thursday night, and streamed his conversations live on his 280,000 subscriber channel, many of whom own AMC shares.
“Adam Aron sets the bar for CEOs who reach out to retail investors who care about what they ask, what they are looking for, what matters to them, while looking after the long-term health of the company,” said Collins.
Collins has used his platform to disseminate information about AMC stock over the past few months and denounce short sellers who are betting against the company. Collins publicly declares that he is not a financial advisor and warns his social media followers not to “blindly follow my financial decisions.”
AMC’s transition from a mature company to a meme stock came in the wake of the coronavirus pandemic that closed the brand’s theaters and suspended revenue. When AMC fell behind on its rent, it hurried to raise funds. With AMC close to bankruptcy, short sellers poured in, doubting the company could weather the storm.
Thanks to AMC’s own fundraising and the apes that drove the company’s share price up, Aron was able to use interest in the stock to raise more money.
After AMC sold hundreds of millions of shares in the past six months, AMC is urging its shareholders to issue an additional 25 million that can be issued after 2021.
Aron reiterated Thursday during his interview with Collins that the company is looking at several acquisition opportunities, including buying ArcLight and Pacific theater locations, which were closed during the pandemic, using funds from stock sales.
He also said the money could be used to pay off debts, cut interest costs, or pay off millions in unpaid rents.
According to data from S3 Partners, AMC has sold about 18% of its float stocks short, compared with about 5% for the average US stock. This week’s rally drove short sellers’ losses to more than $ 5 billion over the year, S3 data showed.
The company’s shares are up more than 2,300% since January.