Tag Archives: Lockdowns

This Tiny Country Beat COVID

On the southern tip of Spain, the tiny UK territory of Gibraltar has vaccinated almost its entire population. COVID deaths have dropped to zero:

Life is beginning to get back to normal. Masks are no longer required outside, curfews are gone, and bars and restaurants are full. Even sporting events have resumed:

Events have also returned to the Rock as Gibraltar hosted what’s thought to be the first fully vaccinated major sporting fixture in the world on Saturday.

Five hundred spectators, each tested for Covid-19 prior to the event, were able to witness British heavyweight fighter Dillian Whyte claim victory over Russia’s Alexander Povetkin at Gibraltar’s Europa Sports Complex.

The fight, called the Rumble on the Rock, was originally meant to take place at the Matchroom HQ, a venue in southeastern England, but was switched to Gibraltar thanks to its Covid-19 safe environment.

Soccer fans were also allowed to witness sporting matches starting with Gibraltar’s World Cup qualifier clash against the Netherlands on Tuesday.

Victoria Stadium welcomed 600 attendees who had previously received two doses of the vaccine and tested negative for the virus on the day of the match.

Only 3% of residents refused the vaccine, which may be one reason why Gibraltar’s results are so good. That may be difficult to recreate in the US or other nations, but Gibraltar provides a welcome view of what life could look like soon as the world races to vaccinate.

I encourage you to get your shot if you haven’t already. Let’s get back to normal life!

For more on COVID and vaccines, check out these posts:

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Photo: “Gibraltar – Rosia” by Roy McGrail (krm gib) is licensed under CC BY-SA 2.0

AMC Stock Is Acting Like COVID Never Happened

AMC burnt over $900 million in the first 9 months of last year*. That presented a bit of a problem.

They had just $429 million in cash left going in the fall of 2020, and that would be gone in a matter of months. So, to stave off bankruptcy, AMC went into fundraising mode, big time.

AMC got a surprisingly good reception from investors and was able to sell over $500 million in new stock and borrow a further $400 million. Since then, additional stock sales have boosted their cash hoard to over $1.3 billion.

This fundraising bought AMC at least a year’s worth of breathing room, even if 2021 is no better than 2020, which seems unlikely. But there’s one little problem…

AMC had just over 100 million shares outstanding in the fall of 2020, per their latest quarterly report. It now has close to 500 million shares outstanding. So, every dollar AMC makes in the future (if it makes any) is now 20 cents as far as shareholders are concerned. Each dollar of profit is only worth 1/5 as much if your shares represent a portion of the company that’s only 1/5 as large as before. This is called dilution.

So this must have cratered AMC’s stock, right? Wrong. In fact, it’s actually up! On December 30, 2019, the stock traded at 7.32. It’s at 8.27 as I write this.

Investors are saying that a share of AMC is actually worth more than it was before COVID annihilated its business and dilution took away 4/5ths of the ownership rights in each share. That makes no sense.

I suspect this stock is being traded on the basis of memes and pure speculation. Indeed, it’s currently mentioned on Reddit’s Wallstreetbets more than any other stock. The price is pretty much impossible to justify rationally unless AMC suddenly makes far greater profits than ever before. Why would that happen all of a sudden, even as COVID is still with us?

That said, I have to applaud CEO Adam Aron and everyone at AMC for doing whatever it takes to save this company. Even the CEO was furloughed in March 2020 to conserve cash! That’s what I call leadership. However, it doesn’t make their stock a good bet at the current price.

I’m going to leave this one to the crowd at Wallstreetbets.

For more on the Wallstreetbets phenomenon, check out these posts:

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*See 11/4/20 10-Q report cash flow statement, cash used in operating and investing activities.

Photo: “AMC Theaters” by JeepersMedia is licensed under CC BY 2.0