The much-reported GameStop (GME) fiasco was the result of Reddit users gathering to buy as many GME shares as possible, thereby burning hedge funds that had bet against the stock. GME has gained 1004.9% year-to-date. Following this event, other penny stocks became prominent targets of Reddit users, causing quick swings in their prices too.
Redditors’ favorite stocks, such as AMC Entertainment Holdings, Inc. (AMC) and Tanger Factory Outlet Centers, Inc. (SKT), have hit prices that make no sense to Wall Street analysts. These stocks’ prices are not reflective of their fundamental weakness.
So, we think investors should exercise real caution in dealing with these names.
AMC Entertainment Holding s, Inc. (AMC)
AMC is a leading movie exhibition company in the United States with approximately 950 theatres and 10,500 screens worldwide. The company licenses first-run films from distributors on a film-by-film and theatre-by-theater basis. It also offers food and beverage products.
As of December 31, AMC operated 394 domestic theatres with limited seating capacities of between 20% and 40%, representing approximately 67% of domestic theaters. It also operated 109 international leased and partnership theatres, with limited seating capacities, representing approximately 30% of international theaters.
In February, New York State authorized the reopening of theaters in New York City after almost a year of them being closed. Under certain limits, including 25% seating capacity, AMC reopened all 13 of its New York City theaters on March 5.
AMC revenues have decreased 88.8% year-over-year to $162.50 million in the fourth quarter ended December 31, 2020. Its adjusted EBITDA has decreased 220.7% from its year-ago value to a negative $324.8 million, while its net loss per share has risen 4676.9% to $6.21 over the same period.
Analysts expect AMC’s EPS to increase 94.1% in the current quarter (ending March 31, 2021). However, consensus revenue estimates of $158.32 million in the first quarter represent an 83.4% decline from the year-ago value. The stock has gained 130.4% over the past month but is currently trading 36.1% below its 52-week high of $20.36.
Based on six analysts’ opinions, AMC has a consensus rating of Sell. The average price target of $4.88 indicates a potential decline of 62.5%.
Tanger Factory Outlet Centers, Inc. (SKT)
SKT is a leading operator of upscale open-air outlet centers that owns and operates a portfolio of 37 centers. The company is a fully integrated, self-administered and self-managed real estate investment trust (REIT) that focuses on developing, acquiring, owning, operating and managing outlet shopping centers.
Last December, SKT entered an agreement with Collection Sites, LLC, a wholly owned subsidiary of QuestCap Inc., in which Collection Sites will lease 50 x 100 ft of space in the parking lots of 33 shopping centers owned or managed by Tanger Outlets for an initial six-month term with the option to extend, expanding its extensive network of COVID-19 testing centers. Further, the State of California has approved Collection Sites listing of testing center locations on the State’s COVID-19 website detailing the location of COVID-19 testing centers. This development is expected to help improve awareness of the individual sites and drive an increased number of customers to each collection site in the state of California.
As of January 31, more than 99% of total occupied stores in SKT’s consolidated portfolio were open, representing approximately 99% of leased square footage and annualized base rent. And its rent collections of the fourth quarter improved to 95% of the amount billed.
But SKT’s revenues have decreased 7.7% year-over-year to $111.16 million in the fourth quarter ended December 31. Its adjusted EBITDA has decreased 6.6% from its year-ago value to $65.94 million, whereas its net income has risen 102.2% to $277K over the same period.
Analysts expect SKT’s EPS to increase 120% year-over-year to $0.06 in the current quarter (ending March 31, 2021). However, consensus revenue estimates of $98.21 million in the first quarter indicate a 9.5% decline from the year-ago value. The stock has gained 21% over the past month but is currently trading 23.8% below its 52-week high of $22.40.
Based on two analysts’ opinions, SKT has a consensus rating of Sell. The average price target of $13.25 indicates a potential decline of 22.3%.
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AMC shares were trading at $13.24 per share on Wednesday afternoon, up $0.22 (+1.69%). Year-to-date, AMC has gained 524.53%, versus a 5.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands.
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