(CapitalWatch, Dec. 2, New York) Now, before you go Ape S@!t, I am not saying that apes are better at picking stocks than investors in AMC Entertainment (NYSE: AMC). To my knowledge, there has been no celebrated chimpanzee equity analyst. However, it is true that we are learning more and more about the intelligence of the animal kingdom as we move towards a less anthropomorphic orientation to the world.
Whoever cared about an octopus before that Netflix (Nasdaq: NFLX) documentary? I certainly didn't—and now I can't eat one. Luckily, avoiding octopi is relatively easy unless you own and operate a Mediterranean restaurant. Still, this is one example of how new information about the cognitive sophistication of other many species is turning our conception (and contempt) for all things unhuman on its head. Man, it turns out, is not the measure of all things.
Apes Are Smart But They Get Bored Too
When it comes to certain tasks, apes have proven to possess superior memory over homo sapiens. Take Ayumu, a young male chimpanzee at the Primate Research Institute of Kyoto University, in Japan. Known as the "chimpion," this aptly monikered ape beat out his human competitors in a memory test centered on recalling a series of numbers 1 through 9 in squares on a screen. Interestingly, apes (specifically, chimpanzees), do not seem to struggle more recalling numbers they see for a shorter interval. After Ayuma nailed the first test, the researchers reduced the amount of time the numbers flashed on the screen. Unlike humans who become less accurate the shorter the interval, Ayuma wasn't fazed one bit—even when the numbers flashed for one-fifth of a second! A follow-up study managed to get humans to Ayumu's level with five numbers, but the ape can do it with 9 numbers with 80% accuracy—something no human has done thus far. (That said, NASA scientists are, you know, busy.)
Luckily (Or Unluckily) AMC Has Been on Our Screens Screen a Long Time
The so-called "Apes" who have been touting AMC over the past year have managed, to everyone's surprise, to keep investors from cashing out. While other short squeezes have had a predictably short shelf life, somehow this AMC game keeps going on and on like Donkey Kong.
For its part, management has done all it can to keep and court these Apes—like giving out free popcorn. Long-term though, real apes may love popcorn (see some cute YouTube videos on this) but these Apes love money. And AMC doesn't make money. Not that the investors on Planet of the Apes care. They care about their agenda and their agenda only—but for how long?
Here, on planet Earth, AMC generates negative FCF, loses money, has negative shareholder equity on the books, and offers, as a stock, dilution by the barrel. And while AMC Apes' attention span has shown to be very human in nature (apes may think and memorize fast but few can get through War and Peace), their attention span and level of interest is finite.
Naturally, management is scrambling to offer the Apes more goodies at the zoo to keep them in, despite the stock's slow slide over the last few months. CEO Adam Aron has even floated the idea of enabling AMC to accept Bitcoin as payment for theatergoers. If such a thing happens you should buy. ...Bitcoin, that is.
As for AMC, this and other offers may entice the Apes, but most movie buffs are not on Reddit. And there will just not be enough of them showing up to make this company—and this stock—viable long-term. Broad investor interest will wane and is waning—and there is no number of tweets that will stave off the selling.
For there is one thing that apes and Apes have in common: If they get bored enough, they'll kill and eat one another.
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