Welcome to another issue of Ramp Recap, a weekly newsletter covering stocks, crypto, memes, a crowdsourced portfolio, and more. If you’re reading this but haven’t yet signed up, you can join 9,035 others and get Ramp Recap delivered to your inbox each Sunday by subscribing here:
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What Happened This Week:
The movie theaters are back! Sort of…
"A Quiet Place, Part II" topped last week’s holiday weekend box office with more than $58 million in ticket sales. According to CNBC, this was the highest weekend total for any movie since the pandemic began. AMC, Cinemark, and Regal Cinemas have also lifted all mask mandates for fully vaccinated customers—however, this still doesn’t mean you can talk during the movie.
While many people are undoubtedly itching for that nostalgic experience of eating 2 gallons of popcorn before the 30 minutes of trailers are finished, it is possible ticket revenue will continue to slide until more blockbusters arrive later in the summer. Some cities are still limiting the number of people who can sit in an auditorium for a showing. Big markets like Los Angeles still require theaters to rope off half of their seats to allow customers to social distance. Add to the fact that there’s typically a drop-off in ticket sales after the Memorial Day weekend and you can start to piece together how the theaters may still face an uphill battle—but you wouldn’t know this from looking at their stock prices, following the memes on Reddit, or listening to AMC’s CEO Adam Aron on a Zoom meeting (with or without pants on).
It will be interesting to see how or if movie theatergoers will shift their consumption of digital content. With theaters largely closed down for the past year, Hollywood was forced to innovate—if you want to call it that. Blockbusters either risked launching a dud in the theaters or going direct to streaming—but now streaming services have increased negotiating power over the theaters. Options are being provided for both simultaneously, with direct to streaming being a much cheaper and more convenient alternative for everyone involved. Recent releases such as “Cruella”, “The Conjuring: The Devil Made Me Do It”, and “Mortal Kombat” have now seen simultaneous releases in theaters and on the respective streaming platform.
As reported on by Yahoo: “Cruella” costs Disney+ streaming subscribers an extra $30 to view at home—which may well have made it more lucrative to Disney last weekend than box-office leader “A Quiet Place Part II” was to ViacomCBS, according to Bloomberg Intelligence analyst Geetha Ranganathan. Based on an estimate from the tracking app Samba TV that 686,000 subscribers bought access to “Cruella,” and given the typical 50% split of box-office revenue with theater owners, Ranganathan figures the Disney prequel generated $34.1 million for the parent company, compared with about $28.5 million for “Quiet Place II.”
While even the most recent ticket demand does not align at all with long-term fundamentals, AMC Entertainment (AMC) surged again this week by another 83%, building off of last week’s 116% gain and bringing the total YTD gain to more than 2,100%. At one point on Wednesday, AMC had a market cap of roughly $36B, which made it more valuable than half the companies in the S&P 500. Not bad for a company that was pushed to the brink of bankruptcy last year due to the pandemic.
As such, it continues to be the most talked-about stock according to Captain:
And if you think $36B is overpriced, then you should probably just ignore the $100,000 price target (implied market cap of $50T with ~500M shares outstanding) being thrown out by FinTok “analysts”.
On the flip side, you have real sell-side analysts throwing out price targets on the complete opposite end of the spectrum. I don’t really give much credence to analyst price targets (and neither should you) but I thought this was a fun visualization. Over the past 5 years, the average and high price targets were consistently higher than the stock price. But now with the parabolic rise in AMC, analysts are slow to play catch up (as always and rightfully so). Essentially, analyst price targets are just moving averages. Change my mind.
The takeaway: Going to the movies is a unique experience that can not be replicated even with the best home theater setup. There are certain movies that absolutely must be seen in theaters to get the full effect—blockbusters that are cerebral or visually stunning (Interstellar, 1917, Avatar, etc). Unfortunately, it may take more than a free bucket of popcorn and memes to lure movie theatergoers back into the seats—as we’ve become accustomed to new ways of living and consuming content post-pandemic.
Regardless, it won’t stop the AMC Reddit apes from distorting their view versus reality. The movie business has been in a secular decline since the early 2000s and it will take an insurmountable amount of memes to save this dying business. Apes strong together, I guess. Power to the retail investor.
Performance Update:
Now let’s see how the People’s Portfolio did this week…
We locked in back-to-back gains on a shortened holiday week. Shoutout to NVDA for holding up our portfolio again. It closed above $700/share on Friday—hitting an all-time high with a market cap of $438B. It has been on an absolute tear the past 3 weeks and since reporting earnings—showing gains in the past 11 out of 12 trading days.
On Friday, we voted for Square to remain in the portfolio for another 10 weeks. We are sitting on a 0.30% gain over the past 10 weeks after giving up a large gain.
NVIDIA (NVDA) is on the chopping block next week for the 2nd time. We’re currently holding onto a 28.13% gain over the past 19 weeks.
We’re currently -7.43% on the year and finally made some headway this week on closing the underperformance gap—still a long way to go. Let’s just try to get back to even first.
Keep an eye out for the new Twitter poll every Friday. It’s your democratic duty to vote each week. Follow along in real-time with nearly 300,000 others on Public.
Portfolio News Highlights:
The biggest stories affecting our portfolio this week:
NVIDIA AI Enterprise Software Drives New Wave of Certified Systems from World’s Leading Manufacturers (Yahoo)
Caterpillar (CAT) Rides on Cost Savings and Improving Markets (Zacks)
Disney+ app downloads jumped 58% amid 'Cruella' premiere: Data (Yahoo)
WTI Nears $70 As Bulls Run Rampant (OilPrice.com)
Jack Dorsey Says Square May Build a Bitcoin Hardware Wallet (Bloomberg)
Coinbase Celebrates Adding Dogecoin to Platform With $1.2 Million Giveaway (Fool)
What Else We’re Reading:
Blogs/Articles:
Valuing Tulips: Guesstimating the Future of GameStop and AMC - Leonard Kostovetsky (The Blindfolded Chimp)
Airbnb’s Future Is About ‘Living,’ Not Just Travel - Nikki Ekstein (Bloomberg)
Is $1 Million Still Worth $1 Million? - Nick Maggiulli (Of Dollars and Data)
MeWork - Scott Galloway (No Mercy / No Malice)
Books:
Deep Work: Rules for Focused Success in a Distracted World - Cal Newport
Need new reading material? Visit my Amazon page for my most purchased book recommendations.