The meme trade should be called the zombie trade—it keeps springing back to life.
Consider stock in theater operator AMC Entertainment Holdings. After gaining 7.4% on Monday, shares are up another 7% in premarket trading. If shares hold their gains, it will be the eighth consecutive rise.
It’s a remarkable return to life for AMC, a popular trading vehicle on Reddit message boards earlier this year. Back then, the stock seemingly went up simply because of all the attention it was receiving on social media.
The recent rally, however, was catalyzed by financial results. The company reported earnings last week, and management sounded upbeat about the potential for theater recovery amid increasing vaccination rates. Its CEO even invoked Winston Churchill’s admonition to fight on during the call.
AMC stock is now trading at about $15, up from just north of $2 at the start of the year, a roughly 600% gain.
As good as that gain is, AMC still trails GameStop, the ultimate meme stock, which has soared 860% in 2021. Next up for meme traders is GameStop earnings, due in early June.
Investors might have expected the meme trade to die down as the economy reopened and traders turned their attention to companies with growing earnings.
No such luck. It’s the trade that just won’t die.
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WarnerMedia’s Combination with Discovery Is the Latest Salvo in the Streaming Wars
WarnerMedia’s combination with Discovery creates the second-largest U.S. media company behind Walt Disney. But the real competition is in streaming, pitting HBO Max and Discovery+ against Disney’s own platform and giant Netflix for bragging rights.
- The deal has the hallmark of Disney’s takeover of 21st Century Fox or the merger of Viacom and CBS, both focused on the future of streaming and content.
- Cord-cutting by American television-watching households has been a years-old trend, but the shutdown of movie theaters during the pandemic accelerated the shift to direct-to-consumer streaming, even for Hollywood studios.
- AT&T shareholders will own 71% of the combined media company, which will be run by Discovery’s CEO David Zaslav.
- Viacom and Comcast, the parent of NBCUniversal, will find themselves on the smaller end after the deal closes in terms of streaming scale, competing against their rivals’ bigger subscriber bases with their Paramount+ and Peacock offerings.
What’s Next: Investors who pick stocks based on their dividend payouts may be the biggest losers in AT&T’s plan to focus on its 5G broadband operations. Analysts said the telecom giant’s 52-cent-a-share dividend could be cut in half if the WarnerMedia-Discovery deal goes through.
Amazon Mulling $9 Billion Acquisition of MGM Movie Studio
Amazon.com is said to have entered talks to buy MGM, the last big independent Hollywood movie studio. The deal would help beef up the content portfolio of Amazon’s Prime Video service as the industry’s consolidation is accelerating in the wake of pandemic-induced changes in consumer behavior.
- MGM’s film library includes the James Bond, Rocky, Pink Panther and The Hobbit franchises. The studio has already postponed four times the theater release of its latest Bond blockbuster, No Time To Die, due to the pandemic.
- The news, first reported by The Information, who cited people familiar with the situation, comes after AT&T and Discovery announced they would merge their media interests. Neither Amazon nor MGM commented on the rumored deal.
- The Wall Street Journal reported in December that MGM was exploring a sale, with its main shareholder, New York hedge fund Anchorage Capital Group, anxious to offload the illiquid investment.
- MGM fired its chief executive in 2018 for having engaged in unsanctioned talks with Apple to sell the studio for $6 billion.
What’s Next: The $9 billion price mentioned in reports is way above what was discussed three years ago with Apple, and even higher than the $8 billion the studio’s chairman said at the time he could extract from a buyer. Amazon’s deep pockets could help it clinch the deal.
U.S. Will Share 80M Covid Vaccine Doses Abroad as Domestic Cases Drop
The U.S. has enough Covid-19 vaccines to send 20 million doses of Pfizer – BioNTech, Moderna, and Johnson & Johnson vaccines to other countries, President Joe Biden announced Monday. That’s on top of the 60 million doses of AstraZeneca vaccine it promised last month to send abroad.
- “We know America can never be fully safe until the pandemic that’s raging globally is under control,” Biden said, adding that the COVAX coalition for equitable vaccine distribution will help ensure doses are sent where they are most needed.
- For the first time since the pandemic started, case numbers are declining in all 50 states and deaths are down 81% since their January peak. “We’re not done yet, and some of the hardest work is ahead,” Biden said, including persuading millions of Americans who are still unvaccinated to get their shots.
- More than 380,000 adolescents ages 12 to 15 were vaccinated during the first weekend it was available to the age group, and Biden said the U.S. has enough doses to vaccinate everyone 12 and older. Seven states have vaccinated 70% of their residents, and by Tuesday, 60% of adults will have received at least one shot.
What’s Next: Responding to criticism over policies that pushed for Americans to be vaccinated first, Biden said the U.S. is donating five times more doses than any other country. He will give an update on multinational coronavirus efforts at the G-7 Leaders’ Summit, June 11 to 13 in the U.K.
—Janet H. Cho
Coinbase Is Issuing a Convertible Bond
Cryptocurrency exchange Coinbase Global surprised investors on Monday with a convertible bond offering.
- Coinbase said it’s raising about $1.3 billion in the bond sale. The cash will be used for “general corporate purposes, which may include working capital and capital expenditures.
- Shares of Coinbase on Monday fell below $250—the reference price from Coinbase’s April direct listing. The stock fell further in early Tuesday morning trading. The debt, under certain conditions, can be converted to stock. More stock is dilutive to existing shareholders.
- Coinbase stock has been under pressure in recent days amid comments from Elon Musk. The Tesla CEO walked back his support of Bitcoin—at least until environmental issues surrounding the mining of the cryptocurrency can be resolved.
What’s Next: Cathie Wood’s ARK Invest, which is bullish on Bitcoin and Tesla, reiterated its view that Bitcoin mining can help, not harm, the environment by speeding the world’s transition to renewable energy.
—Connor Smith and Al Root
Monthly Child Tax Payments of Up to $300 Will Begin July 15
Millions of lower- and moderate-income families will start receiving monthly child tax credit payments on July 15. The payments, passed as part of Biden’s $1.9 trillion coronavirus relief package, replace the credits families used to take on their income taxes.
- The payments are based on a child’s age as of the end of 2021, providing funds of up to $250 per child under age 17 and $300 per child under 6.
- The money is for individuals earning up to $75,000, heads of household earning up to $112,500, and married couples filing jointly earning up to $150,000, with smaller amounts for those earning more. The families of nearly 90% of U.S. children qualify, President Joe Biden said Monday.
- Most families will receive the money automatically each month by direct deposit from the Treasury Department and the Internal Revenue Service, based on their 2019 or 2020 tax returns. Others will get paper checks or debit cards.
- Congress also temporarily expanded eligibility to parents who don’t earn enough to pay income taxes. The IRS will soon share a portal where people can update their address, bank information, and family status, as well as find the answers to frequently asked questions.
What’s Next: Some Democrats have pushed to make the one-year tax credit permanent as a way to help cut child poverty in half. But Biden’s $1.8 trillion American Families Plan proposes extending it only through 2025.
—Janet H. Cho
Be sure to join this month’s Barron’s Daily virtual stock exchange challenge and show us your stuff.
Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.
Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and, at the end of the challenge, the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.
Are you ready to compete? Join the challenge and pick your stocks here.
—Newsletter edited by Stacy Ozol, Mary Romano, Liz Moyer, Matt Bemer, Ben Levisohn