Earnings Beats Don’t Always Equal a Move Up
One highly anticipated earnings report captured the attention of the market this week – but it doesn’t seem to be enough to buoy the flagging stock.
Earnings calls can be a big catalyst for profits, given the right mix of exceeding estimates and a company saying the right things in its forward-looking statements.
They can also leave investors holding the bag if a company fails to perform up to expectations.
The potential for big movements, both up and down, creates a lot of excitement surrounding the earnings reports of the market’s biggest companies.
And perhaps no earnings report has had more hype surrounding it than that of the market’s most popular short squeeze stock, AMC Entertainment Holdings, Inc. (AMC).
With the “meme stocks” steadily falling from the heights they achieved in early June, long investors are desperately hoping for a new impetus to drive the stocks back up.
Following the market close yesterday, AMC released its highly-anticipated Q2 2021 earnings report.
While the report was overall positive, it is clear that there are still major hurdles for the movie theater chain to overcome – and that it wasn’t enough to pull the stock out of its tailspin.
Where’s the money?
From a purely financial standpoint, there are some positives to point to from AMC’s latest earnings report.
Revenue continued to grow from the prior quarter’s $148 million up to $445 million. Earnings per share crushed analysts’ expectations of a loss of $0.94 per share by coming in at just a $0.71.
AMC has also done well to embrace its meme stock status and use its inflated share price to raise more than $1.24 billion in new equity capital.
Aside from its balance sheet, AMC is making some interesting moves in an effort to “go on the offensive” in the words of CEO Adam Aron.
Maybe the biggest ploy is AMC’s announcement that it will soon be accepting Bitcoin as payment online for theater tickets and concessions – a move that is sure to make cryptocurrency investors happy.
Aron also talked about competition from streaming services, and his belief that if VHS, DVDs, big screen TVs, and other sources of competition to the movies has done little to curb people’s enthusiasm for going to the movies, that streaming services wouldn’t either.
But for all of the enthusiasm coming out of its latest earnings report, AMC surely still faces an uphill battle.
And yesterday’s trading makes it seem as though much of the market agrees…
How do I get some?
It’s great that AMC has been able to raise so much capital, and that should help the stock find a solid floor eventually.
But I don’t believe the stock is done with the decline we’ve seen over the last two months. Not even a solid earnings report is helping the stock much right now.
After opening more than 9% up from the prior close following its latest earnings report, shares of AMC ended up trading greater than 6% lower on the day.
The company still has many issues, chief among them the rapid spread of the Delta variant of COVID-19 that is threatening to bring new restrictions to many parts of the U.S.
And even though revenue has increased, it is still a long way off from the levels we saw in 2019 – a clear sign that, while recovery is happening, AMC is not out of the woods yet.
Meanwhile, AMC is still burning money, and I think the stock goes lower as it makes lower lows and lower highs in the coming months.
But while I may be down on AMC at the moment, I believe that the short squeeze trend that it helped to start is giving rise to a wealth of opportunities elsewhere.
You just have to know where to look…
A Better Way to Profit from the Short Squeeze Phenomenon
While most of the market was focused on AMC’s earnings report, my S.C.A.N. system was hard at work identifying the highly-shorted stocks to which the largest money flows were actually going.
On Monday, I picked up on a signal that showed me unusual buying activity on Norwegian Cruise Line Holdings Ltd. (NCLH), and I gave Super Squeeze Profits subscribers specific instructions on the exact trade to make.
One day later, those subscribers already had the chance to rake in a 42.4% gain on half of their position while we wait for the rest to hit our final profit target.
That’s just one example of the many gains Super Squeeze Profits members have had the opportunity to secure this year. And there’s plenty more to come.
Every week, I release new trade recommendations on the hottest short squeeze plays in the market.
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In the Spotlight: Another big partner for cryptocurrencies
With Bitcoin and other major coins now on the rebound after a prolonged dip, AMC isn’t alone in embracing cryptocurrencies.
And this week, investors gained another avenue through which to buy.
On Tuesday, PayPal Holdings, Inc. (PYPL) rolled out the newest feature on its Venmo application that allows holders of its credit card to automatically buy cryptocurrencies with the cashback earned from their purchases.
Users can choose from Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, commissions-free through the program. They will also be able to sell those coins through the Venmo app.
Venmo already allows users to purchase crypto directly through it’s app, but the option to use cash back points to buy crypto may go a long way in attracting new investors that otherwise would not have spent money on crypto.
This is just another tailwind for cryptocurrencies after fears over Chinese regulations knocked many of the biggest coins down earlier this year. I’m a big believer in the cryptocurrency market, and I’ll be keeping you posted on the latest developments right here at Profit Pregame.