The brief rally from the middle of the week was nice while it lasted, at least. After the Dow spiked 500 points around the start of trading yesterday, it spent this morning reversing those gains, losing around 400 points before some US workers even had their morning coffee. This is bad news for investors who hoped the sell-off was over.
Shares of former meme stock favorite AMC have also dropped dramatically this morning. The theater chain was hammered throughout 2020 with health-related lockdowns and has recently announced that it plans to roll out a reverse stock split. It plans to raise around $110 million in capital to help it alleviate some of its outstanding debts. Its plans will require shareholder approval, so it might not go through with the reverse stock split, but the prospect alone is enough to spook some investors.
In some positive news, YouTube TV has won the rights to NFL Sunday Ticket in the 2023 season. The huge streaming deal could be a massive win for YouTube’s parent company Google, as Sunday Ticket allows NFL fans to watch out-of-market games. Google has pushed to grow YouTube TV in recent years, investing in everything from original content to sports deals with the MLB and NFL.
Stocks Fall After Brief Rally
The stock market tried to shake off pessimism and post some solid growth to end the year. Sadly, it wasn’t meant to be. After the three major indexes jumped yesterday, they spent the morning dropping to an abysmal level. The Dow Jones Industrial Average dropped around 1.36%, erasing most of its gains from yesterday. The S&P 500 sank another 1.68%, and the tech-heavy Nasdaq Composite led the way down, as usual, losing 2.32% after the opening bell.
Stocks were up yesterday on a few optimistic economic readings. Nike and FedEx posted better-than-expected results, and some surveys indicated that consumer sentiment was bouncing back in December. However, that excitement turned into anxiety overnight, and the market folded back into its usual 2022 pattern: a bearish position.
“I’m leaning short on the equity markets,” says Appaloosa Management founder David Tepper. Like many analysts, Tepper is currently deeply concerned about the hawkish moves from central banks like the Federal Reserve and the Bank of Japan. “The upside/downside just doesn’t make sense to me when I have so many … central banks telling me what they are going to do.”
AMC Shares Tank
Shares of AMC Entertainment sank like a stone Thursday morning after investors heard the company’s plan to raise capital and implement a reverse stock split. The stock is down nearly 15% since the start of trading, representing a massive sell-off as even the most die-hard “meme investors” give up on the beleaguered theater chain. AMC plans to raise capital by selling its “APE” units, a preferred stock that is targeted at retail investors who gather on social media sites like Reddit.
“Clearly, the existence of APEs has been achieving exactly their intended purposes. They have let AMC raise much-welcomed cash, reduce debt and in so doing deleverage our balance sheet and allow us to explore possible [mergers and acquisition] activity,” AMC’s CEO, Adam Aron, said recently. Its plan to implement a 10-to-1 reverse stock split will require shareholders to meet and approve the outlined moves. This will also coincide with the company moving the APE units into common stock.
AMC has still not shaken off its debts from the depths of the lockdowns in 2020. Without more capital, it’ll be difficult for the company to pay off its debt load and return to normal, profitable operations.
YouTube TV Wins NFL Sunday Ticket
Winning the rights to air NFL games is basically a license to print money. At least, that’s what YouTube TV is hoping after winning the exclusive streaming rights to NFL Sunday Ticket. The premium service allows fans to watch out-of-market NFL games, and it’s one of the league’s most popular products.
“We’re excited to bring NFL Sunday Ticket to YouTube TV and YouTube Primetime Channels and usher in a new era of how fans across the United States watch and follow the NFL,” Roger Goodell, the Commissioner of the NFL, told reporters. Sporting leagues like the NFL have recently made a massive push to meet consumers where they are. Sports syndication has been married to traditional cable packages for decades, but the average American viewer consumes content primarily through streaming services.
“There is so much money in sports, and getting live sports onto the streaming platforms is an area that is still not completely tapped,” remarks Qvest’s EVP of digital media supply chain, Jon Christian. Strangely enough, shares of YouTube’s parent company Alphabet were down 2% this morning after the news broke. This might not be related to the NFL deal, though, as the market is down across the board this morning.