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Reddit investors are causing a sensation in the market, and the market likes them in return. The r/WallStreetBets crowd has soared stocks from so-called stocks even as retail investors mobilize around battered stocks with strong short-term interest and in return. , corporations thank them for making an investment in their corporations.
Adam Aron, CEO of AMC Entertainment (NYSE: AMC), recently made the ambitious resolution to bring retail investors more into the fold, delaying the movie chain’s annual meeting so that smaller investors can attend and then awarding them special film awards. like loose popcorn. .
While marijuana maker Tilray (NASDAQ: TLRY) hasn’t gone so far as to offer loose marijuana to shareholders, Chief Executive Officer Irwin Simon needs to know that he, too, appreciates what the company has received.
In an interview with CNBC, Simon said he “absolutely” welcomes the retail investor and is “very, very supportive. We love you. ” But that could go as far as the similarities between AMC and Tilray go, and investors would do more to put their cash into the marijuana maker than the movie’s operator, even if they don’t let go of things.
Tilray’s business is developing rapidly. The wonderful opportunity, of course, lies in the recently completed acquisition of Aphria. Although the corporation still carries the call of Tilray, it is Aphria’s control in rate (Simon CEO of Aphria before the merger).
Tilray is the largest marijuana company, with a combined pro forma profit of $685 million, and the merger places the combined company’s market capitalization nearly on par with Canopy Growth, lately the largest marijuana inventory under this measure. $9. 6 billion for Canopy.
Together, Tilray and Aphria now have a global recreational, medical and pharmaceutical distribution business, as long as each remains largely separate in express geographic areas. the pharmaceutical company focuses on Germany.
It also owns U. S. -based hemp and cannabidiol (CBD) businesses. As the craft brewing business of sweetwater brewing, which it acquired last November, and which just introduced its Elevated H. A. Z. Y. IPA beer to be served exclusively on Delta Air Lines.
Tilray also expanded global agreements in its position with Sandoz, Novartis’ generic drug subsidiary, as a joint venture with Anheuser-Busch InBev for non-alcoholic beverages containing THC and CBD.
Tilray is a company that goes higher. This is not the case for GAC, which has relied on reopening the economy to return to what it was before the COVID-19 pandemic, and even then, its declining business.
Not only AMC, however, the film industry as a whole has contracted, as fewer tickets are sold per year (albeit at higher values). Ticket value inflation simply masks the severity of the decline; In 2019, GAC’s admissions revenue declined by more than 2% to $3. 3 billion. AMC withstood an increase in concession sales, but benefited again from inflationary pressures.
During the recession, the scenario worsened markedly and AMC was forced to move into a really large debt to stay afloat, asking almost at some point for loans that would allow it to hold out until 2021.
GAC secured those loans, the last of its last quarter with $5. 4 billion in long-term debt, $1. 6 billion in existing liabilities and $4. 9 billion in operating leases. It has $800 million in operating lease bills due this year, plus a billion dollars owed next year. GAC’s ability to make those bills, as well as to service your debt, calls into question your ability.
Over the more than 3 months, GAC has posted a loss of $567 million and burned $313 million in cash.
Reddit investors would likely have taken advantage of the short stress to make phenomenal profits in no time, but it’s a safe bet that doesn’t rely on the basics of the movie operator’s business.
Perhaps some investors are pushing the CMA only on the basis of the stock wave itself. For this strategy to be profitable, you must exit the position at the right time, and that is not investing, it is playing.
Tilray offers investors a much higher risk-return profile. And while marijuana inventory possibly has similarities to meme inventories, it’s not AMC Entertainment, and that’s a smart thing to do.