Thursday, March 23, 2023

Action memes raise $5,000 million

Las action meme during his trading frenzy $5 billion raised thanks to cash and time available from retail investors during the COVID-19 pandemic, even though Windfall profits have done little to boost its value according to the stock market Jennifer Hughes and Andrew Edgecliffe-Johnson in the Financial Times,

Las eight shares they also have Achieved a combined market capitalization of $7.5 billions from the frenzy of retail operations in early 2021 28 January American Runner of the Year Robinhood angered customers by limiting their ability to buy shares in those companies.because of what There will be a sudden drop in prices.

Small investor who helped chain of mostly consumer names multiply by 10 or more in just a few weeks Squash hedge fund is betting on corporate collapseAs well as strengthen brands that were once beloved, such as a video game retailer GameStop-A,

Another result of the stock rally was allowing companies including cinema operators AMC EntertHldg RG-A Y Gamestop, raise new capital, Highlighting how the markets that are expected to reflect corporate fundamentals can sometimes change them.

“Some bubbles don’t really translate into the real economy, but some bubbles do,” he said. Ite Goldstein is Professor of Finance at the Wharton School of Business at the University of Pennsylvaniawho now cite meme verbs in their lectures on the real-world effects of the trading frenzy.

“The speed at which some companies Used inflated stock prices to improve your finances This is the mechanism through which a trading frenzy can become self-fulfilling,” Goldstein said. “The lesson for companies was to seize this opportunity and issue more shares.”

Since its shares have multiplied nearly 20 times in January 2021, AMC raised $2.8 billion through stock sale, new debt and attracting new large investors FT as per calculation. he proposed last month Further restructure its capital structure.

AMC has talked about recovery capability After the coronavirus pandemic, but rivals have struggled, Cineworld is the second largest cinema chain in the world filed for bankruptcy in September and willfully mourn his misfortune Mim Shares Isn’t Making The Same Profits As Your Competitor,

GameStop has raised $1.8 billion in the past two years. In contrast, Bed Bath & BeyondAnother favorite of retail investors, warned of possible bankruptcy and disclosed Thursday that it had received a notice of default from JPMorgan Bank, The housewares chain was too slow to take advantage of shareholders, It will only raise new capital in late 2022 after buying back $400 million of its shares in 2021 In an effort to show faith in a recovery plan.

“The big difference between the AMC meme craze and the Bed Bath & Beyond meme craze is that the timing and the underlying market conditions are vastly different,” he said. James Gellert, CEO of RapidRatings, is a data analytics company that tracks the financial health of companies. ,

“When AMC and GameStop were in their heyday and when AMC issued more stock, we were in a position Bull market with high liquidity”, Gellert indicated:“ Today we are in such an environment high volatility In the closing hours of the credit cycle with less liquidity.

amc boss adam aaronPart of Cineworld put it more bluntly this month when discussing the collapse of American movie rival Regal: “If you’re wondering why AMC makes so much money: In tough times, companies that don’t just die.” “, he wrote on Twitter.

However, the gap between fundraising and performance suggests that painful lessons may still lie ahead for investors in meme stocks.

loss GameStop’s new funding helps replace $690 million in net debt in 2020more than twice the market capitalization at the time, a Net cash pile worth $468 million as of October according to data from S&P Capital IQ, Even then, Hasn’t produced operating profit since early 2019 And since he became famous with meme shares, a A 17% increase in sales was matched by a similar increase in costsIt is suggesting that positive returns from its new funds are still elusive.

“In long bull market periods, companies can survive as unprofitable entities for a long time, and as long as you can raise capital to burn, that’s fine. But at some point the music stops,” Gellert said.

“It was logical that companies get caught up in meme mania Seize the opportunity to raise capital at attractive rates,” said Harry Mameski, Professor of Finance at Columbia Business School, “However, how much time they bought themselves depended on how much capital they were able to raise compared to the debt they already had on their books.”

Along with GameStop, AMC, and Bed Bath & Beyond, Robinhood’s January 28, 2021 buyout ban is included Blackberry, Nokia, audio equipment manufacturer Koss, retailer Express and lingerie retailer Naked Brands GroupSince acquiring Hong Kong-based electric vehicle maker Centro Electric.

Australian Justin Davies-Rice, President and CEO of Naked Brands was second only to AMC’s Aaron in quickly recognizing a fundraising opportunity. After raising $50 million by selling new shares in January 2021, Naked raised that amount to $183 million in July., During that time the company “transformational” approach online for your unit and Davies-Rice sold its physical stores at a loss of NZ$1.who also assumed the debts of the Company.

However, in November of the same year Naked issues new shares to Centro to give Hong Kong group controlling 68%, One of the conditions for the reverse acquisition of Centro was that New owners will inherit at least $280 million in cash and no more than $10 million in liabilities, as well Sold Davis-Rice to Hollywood lingerie brand Frederick’s for $1 Australian plus $12.6 million to cover its liabilitiesWhereas Forgave $9.5 million in intercompany loans.

Center said that Will deliver 20,000 vehicles in 2022, Reported unaudited figures for the first semester 337 units sold, his actions are Dropped 90% since acquisition,

AMC EntertHldg RG-A It closed the Friday session at $5.22 and is above the 70-period moving average weekly candlesticks. Meanwhile, EI indicators are mostly bullish.

GameStop-A It ended the week at $22.45 and the 70-period moving average held the same position as before. Meanwhile, EI indicators are mixed.

Nation World News Desk
Nation World News Desk
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