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Never one to shy away from controversy, the infamous "Pharma Bro" Martin Shkreli – yes, the same person who had jacked up the price of AIDS medication Daraprim by 5,000 percent – is now out with a bearish take on AMC Entertainment, suggesting that the theater chain stock is fairly valued even as it sits on a year-to-date loss of over 50 percent.
In a move designed to incense the WallStreetBets crowd, Shkreli published his bearish thesis on AMC Entertainment on Reddit – a veritable bastion for retail traders.
— shkreli (@ShkreliRuleof5) July 5, 2022
As per Shkreli's blog post, AMC can only expect to generate $3 billion to $4 billion in admission revenues and $800 million in EBITDA in the best-case scenario. Consequently, Shkreli has accorded an $11 stock price target to AMC shares, based on a 7 percent discount rate and a return to $5 billion in total revenues. By the end of this decade, Shkreli sees AMC printing around $7 billion in revenues.
Critically, the former pharmaceutical executive has adopted a less-than-stellar view of AMC's Hycroft Mining deal, terming it "embarrassing" and a dud investment as it would not "result in value creation."
As a refresher, the movie theater chain recently acquired a 22 percent stake in the troubled mining company, unlocking $527.9 million in additional financing from the likes of Eric Sprott as well as an At Market Issuance Sales Agreement with B. Riley Securities, which allows Hycroft Mining the opportunity to sell $500 million worth of common shares via periodic offerings. As we had noted previously, this investment gives AMC a very cheap call option on gold's ascendancy in the current commodities' super cycle.
While taking a dig at the most famous talking points of the "Apes" around synthetic shares and manipulation by short-sellers, Shkreli notes:
"Put the bullshit of "synthetic shares" and other non-existent creations out of your mind. Is this a stock you want to buy because you are getting it for less than the price a normal buyer (say Warren Buffet, KKR, etc.) would pay for [the] company in an auction?"
Do you think Shkreli's hot-take on AMC is justified? Let us know your thoughts in the comments section below.