Amazon Bailing out AMC | AMC & APE Moon vs Bankruptcy

hey everyone meet Kevin here I think

it's time to have an honest discussion

about AMC in this video we're going to

talk about how much ape AMC has sold

we're going to do some projections to

try to understand the AMC valuation

we'll talk about what Amazon just

announced and how much that could move

the box office from a fundamentals point

of view

now look I've been a little aggressive

about uh ape and I've mostly been

aggressive about ape and AMC because I

kind of thought that ape was a rip-off

and was going to hurt a lot of people so

I sold my own ape shares

and kind of told everyone it'd probably

be a good idea to do that as well and I

want you to see the passion in that

video clip which I'll show you right

here let's make this very very clear ape

is a ploy it is a ploy to hope that Meme

stock Traders pump up ape stock to the

moon so that way there's a sustained

Market AMC can dump shares raise lots of

money and pay off their debt and again

if you want a free nft to Showcase how

stupid it is to hold your ape shares

make sure to go to the AMC investor

connect website and get your free nft

because let me tell you ape Shares are

going to be worth as much as that nft is

going to be worth

zero in six to 12 months I expect to

ticker symbol 8 will be worth one dollar

or less that would be an 86 percent

decline from today and it'll be

worthless and delisted soon after that

the hope is that AFC will have paid off

all of their debt before ape becomes

worthless but until 8 becomes worthless

AMC will continue to use it as a free

money printer and this is a brilliant

farce so I got a lot of hate from the

AMC Community for this I was called a

shill a sellout a suit yet I sold my AP

shares at over eight dollars and now

it's trading for

1.21 cents we're almost at the one

dollar that I predicted and I'm not

trying to Pat myself on the back I'm

just trying to help people see a red

flag when I see it

and people got mad at me for selling in

January

in hindsight I wish I never got back in

right because I was right about selling

and so when I see something fundamental

I'm not suggesting you copy me exactly

or do exactly what I say all I would say

is hey let's have a reasonable dialogue

and try to understand what's actually

going on

with that said let's talk about

AMC

the movie theater and let's talk about

this Amazon deal that just came out so

we're gonna incorporate these two things

first in the last earnings Adam Aaron

suggested that hey you know what we've

had a soft box office quarter and so

revenue is declined sequentially that

means quarter over quarter okay uh In

fairness they did and if you put the

quarter over quarter numbers in red on

the left you'd actually be able to

properly compare the quarter over

quarter numbers see we don't really want

to compare to uh 2021 because people

weren't going to movie theaters as much

we kind of want to compare quarter to

quarter and maybe even back to 2019.

back in 2019 we were doing around 1 to

1.3 billion dollars of Revenue and in Q2

it looked like we were kind of going

back in that direction at about 1.16

billion dollars of Revenue however

quarter of a recorder those revenues

slipped in total 17 and you can see how

the categories have declined here other

theater Revenue down 24. other revenues

of course come from Those ads that you

see before a movie plays and things like

gift cards okay then we saw operating

expenses stable in Q2 which is good we

really don't want to see these explode

because that would mean employee costs

are going up right and then Q2 they were

at 402.2 and in Q3 they were again

stable 400.6 okay good so stable

operating the industry just shrunk a

little bit that's not necessarily AMC's

fault that's just okay a bad box office

quarter the biggest problem with AMC

though is of course over here corporate

borrowings corporate borrowings went up

with the expense went up by about five

million dollars as interest rates are

increasing and AMC refinanced some of

its debt presumably presumably at a

higher interest rate leading to this

higher interest expense in the quarter

rising from 80 million dollars to 85.1

the operating loss if you just consider

operations uh was only 16.1 million

dollars but then when you take out other

costs and depreciation and of course

interest you get to a total loss of 226

million dollars and if you want to know

what kind of cash burn that is in terms

of cash flows since obviously

depreciation isn't an actual cash

expense cash burn is sitting at

179.2 million dollars which is a little

bit of a problem given that right now

AMC has

684.6 million dollars so how do we

reconcile all of this and if you want to

know the refinance information that's

actually sitting right here they

refinanced a 471 million dollar loan at

12.75 that by the way is why yes your

interest expense is rising so you've got

a company in an industry that is

somewhat shrinking you don't actually

have a lot of cash operating expenses

are are stable and your interest expense

is rising at 85 million per quarter you

actually don't have a lot of runway in

fact if we do some quick math we can see

with 684.6 million dollars of cash

assuming they get to a break even

without touching their credit lines they

have two years of cash and then they're

out of cash then they have to start

borrowing again

uh if you don't go break even and you

keep having these negative nearly 200

million dollar quarters you'll be out of

cash at AMC in three months and then

unfortunately it's either borrow more

increasing that uh that corporate debt

expense or it's go bankrupt but we have

to talk about this thing called ape ape

are the

AMC preferred Equity shares uh I got a

lot of heat for talking about these ape

shares basically being a setup uh and a

tool for AMC to basically just

give the AMC Apes that is retail

investors something to be excited about

something to go to the moon for

something to go fight for

only to turn around and dump those

shares on that retail audience using the

money they raise there to pay off the

debt at AMC now I personally actually

thought this was a pretty creative Ploy

because if they could rip off retail

investors at least they would be able to

pay off their debt and if they paid off

their debt they could make sure that the

30 000 people who work at AMC don't go

jobless if the company goes bankrupt

unfortunately the company hasn't done a

really good job at ripping people off I

hate to say that because the stock has

plummeted as I unfortunately predicted

the stock has plummeted from where I

sold it in the Eight dollar range all

the way to as we see here a dollar and

21 cents but what bothers me the most is

that this stock this is the weekly chart

by the way let's zoom out to the day

chart here so you can see this a little

more you could see with every one of

these ticks representing a day they this

company AMC had plenty of days to dump

shares all over here look at that you

had almost all of all you had you had 30

days here 30 days that you could have

sold this stock for over five dollars

over five dollars they could have sold

the stock for and dumped on retail and

what did they decide to do instead

well they didn't

instead they decided to just sell 14.9

million shares raising only 36.4 million

dollars which is a drop in the bucket

relative to the debt they have 36.4

million dollars doesn't even pay for two

weeks of Interest

it's bad and if you divide these two it

means as of on November 8th they've been

selling at a

2.44 average now the Stock's only worth

a buck 21. so they have to sell twice as

many shares

just to raise more money and I think

they're starting to panic because you

even see that today which is really

weird today AMC stock actually Rose

4.3 percent but ape stock which usually

moves in conjunction with AMC stock

fell four percent that's really weird

and look at this massive volume boost

all of a sudden you went from an average

of 13 to 20 million shares traded all

the way to 46 million shares that's a

difference of about 25 million shares

which In fairness if they sold if this

was AMC selling they potentially raised

another congratulations two weeks worth

of Interest 30 million dollars except

they pushed the stock more into the

abyss that's the ape shares now I expect

ape to be milk to dry and basically

become completely worthless this is what

I've been saying for a while now but

sometimes people get mad at me when I

talk about fundamentals so what am I

going to do well no I'm not going to

pitch you my program on fundamental

analysis stocks and psychology of money

zero to millionaire real estate

investing with a 60 off Black Friday

coupon code which comes up in a couple

days but instead I'm gonna talk dirty to

you and give you some more fundamental

analysis

Amazon announced today that they plan to

invest one billion dollars to produce 12

to 15 feature films a year that they

would air in cinemas

the box office according to Bloomberg

intelligence is expected to grow by 18.4

percent in 2023 and could go up by

another 15 to 20 percent because of

Amazon

that's because in 2022 we are uh sitting

at about 1 or 7.6 billion dollars of a

box office that'll go up to hopefully 9

billion in 2023 and maybe even another

15 to 20 on top of that if this uh AMC

uh plan comes to fruition in 2023 so

what do we want to do well let's take

Amazon or um Amazon let's take AMC's

revenue and let's just average out Q2

and Q3 and let's take about a billion

dollars of Revenue just to make math

easy let's just say that's about your

average quarterly Revenue let's now try

to understand some future projections

for this company and what the valuation

of this company actually looks like

let's grow one billion dollars by 18.4

and 20 so in other words we're going

with the best case scenarios here like

this is a pretty bullish scenario that

would generate about 1.4 billion dollars

of revenue for AMC if we then subtract

out the 27 percent that usually goes of

total revenue that goes to the films

they split those revenues about 50 50 to

the film companies and we take out 65.4

percent for rent food and operating

expenses keep in mind the actual

operating expenses last quarter were

about 70.4 percent but because rent

should be pretty stable since you have a

bunch of empty seats I'm actually taking

a whole five percent off of that margin

I'm giving them an extra five percent

margin just because of the scale that

they could get since they're paying rent

whether the seats are full or not right

so I feel like I'm being generous here

I'm using the biggest numbers possible

on growth and the biggest growth or or a

larger margin here that would leave them

about a hundred and seven point eight

million dollars if we then subtract out

about 85 to 82 million dollars of debt

expense maybe even uh well I guess it'll

probably be like 85 to 90. somewhere

around there since it's kind of trending

up a little bit as they do refinances

and such that would leave about 15 to 20

million dollars in profit per quarter

for AMC in this potential best case

scenario which if you divide it'll just

say 20 million dollars of profit by the

about 1 billion shares outstanding which

I just want to show you so you don't

think I'm making these numbers up the

share is outstanding are right there

these keep in mind are the diluted share

counts so they consider AP and all that

right so now if we take about 15 million

in profit you'll be at about an EPS of

1.5 cents if you take 20 million it'll

be about 2 cents so you're somewhere

between one and a half to two cents of

eps which if we annualize that forget

seasonality for a moment just annualize

it times four gets you to about six

cents of earnings divided by the current

share price is seven dollars or take the

share price divided by that 7.64 cents

you're basically in an optimistic

scenario looking at a p e ratio of about

127 times

which for a company that's not a growth

company that's a startup and has really

good long-term prospects

the valuation is really high and you

have to make some really optimistic

scenarios to make this one work

again the assumptions are that box

office revenues and AMC would equally

benefit from that or growing at 18.4

plus 20 percent uh revenue is about 1.4

billion per quarter the last time by the

way they were around 1.3 billion dollars

before the pandemic was 2019.

and they actually lost money like their

margin was less than two percent except

I'm assuming a 7.55 margin in this

generous scenario

I don't know like let's let's try to be

positive here but this is very very

risky if you now add to the fact that

ape is failing because they're trying to

sell it but they did it too late like

the idea to rip people off and pay off

the debt was there but they failed at it

it's just

just not looking good that's all I got

to say that's it that's it look is it

possible that if the stock market

rallies going into CPI or into 2023 as

inflation comes down is it possible that

the stock meme rallies and risk rallies

absolutely is it a good fundamental play

I'll leave it up to you