‘Meme Stocks’ paint a confusing future for cinemas as a business

There’s a useful overview of the state of play in UK cinemas in the Guardian recently. But there’s also an interesting development around something called ‘Meme Stocks’ which, according to the US Chartered Finance Analyst Institute are…

“…a risky bunch. Prone to wild and unpredictable swings based on rumors and internet message board discussions, they are traded mostly by retail investors in search of the next big thing and with little regard for valuation models or the business’s underlying fundamentals.”

The FT is reporting [£] that cinema chain AMC, despite having ticket revenue at about 29% of 2019 levels (with a predictably shocking year, due to the pandemic in 2020), fairly gloomy short-term prospects for recovery, and a growing sense that big studios are content to sidestep a lot of theatrical sales in favour of earlier streaming releases…

…have seen their stock price from the end of 2019 ($7-ish) go over the $30 mark. At one point, the Meme Stock investors have pushed it as high as $62!

The company has used this craziness to sell over $1bn of equity [£] in the quarter, but it still seems very far from being a secure long-term bet from an investor point of view – and it means that we are going to be getting a lot of very confusing messages about the future of employment in cinemas – and the future of theatrical release to the film industry.

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