One of AMC Entertainment’s most ardent retail investors is playing the long-game with the stock but foresees a return to Earth for the shares before the end of the year.
Speaking on CNBC’s “Squawk Box” on Friday morning, Trey Collins, 23-year-old host of the Trey’s Trades channel on YouTube, said he believes the fundamental value of AMC stock will be $20 to $25 a share at the end of 2021.
“I think most of the retail investors understand this is not the true fundamental value of AMC,” Collins said.
Shares of the company hit an all-time high this week, topping out at $72.62 before retreating to around $50. In premarket trading Friday, shares were down more than 7%.
“Just because the stock market tells you exactly what every single security in the market is worth at that given moment, if there is someone out there willing to buy AMC stock trading at $47 … that means it’s worth $47,” he said. “The momentum trading aspect, even if it doesn’t necessarily reflect on the current earnings or future projected earnings, doesn’t mean there isn’t money to be made.”
Collins uses social media to document his investments in the stock market and has become the de facto mediator between AMC and its largest shareholder base, who call themselves apes. Collins has interviewed AMC CEO Adam Aron twice, including Thursday night, airing their conversations live on his 280,000-subscriber channel, many of whom are owners of AMC’s stock.
“Adam Aron is setting the bar for CEOs reaching out to retail investors and caring about what they’re asking for, what they’re looking for, what they care about, as well as watching the long-term health of the company,” Collins said.
Collins has used his platform to disseminate information about AMC’s stock in recent months and to decry short sellers who are betting against the company. Collins publicly states that he is not a financial advisor and warns his social media followers not to “blindly follow my financial decisions.”
AMC’s transition from mature company to meme stock came in the wake of the coronavirus pandemic, which shuttered the brand’s movie theaters and suspended income. As AMC fell behind on its rent, it scurried to raise money. With AMC on the brink of bankruptcy, short sellers swarmed in, doubting the company could weather the storm.
Thanks to AMC’s own fundraising and the apes driving up the company’s stock price, Aron was able to capitalize on the interest in the stock to raise more cash.
After selling hundreds of millions of shares in the last six months, AMC is asking its shareholders to issue 25 million more that it can dole out 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 that were shuttered during the pandemic, and would use funds raised through stock sales to do so.
He also said the cash could be used to pay down debt, reduce interest costs, or pay off millions in unpaid rent.
AMC has around 18% of its float shares sold short, versus about 5% for an average U.S. stock, according to data from S3 Partners. This week’s rally pushed short-sellers’ losses to more than $5 billion on the year, S3 data showed.
Shares of the company are up more than 2,300% since January.