FUBO

fuboTV Inc.

3.55
USD
-3.79%
3.55
USD
-3.79%
2.32 35.10
52 weeks
52 weeks

Mkt Cap 513.27M

Shares Out 144.58M

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Why AMC Entertainment, FuboTV, and SmileDirectClub Rocketed Higher This Week

What happened Shares of meme stocks AMC Entertainment Holdings (NYSE: AMC), fuboTV (NYSE: FUBO), and SmileDirectClub (NASDAQ: SDC) were big winners this week. Through Thursday trading, they rose 14.8%, 27.4%, and 20%, respectively. Big bounces can happen when your stock has been beaten down and is heavily shorted, as these three were. Even after this week's gains, AMC Entertainment is down 25% over the past year, with 18.4% of its stock sold short as of July 15. SmileDirectClub is down 74%, with 21% of its shares sold short. Meanwhile, fuboTV is down 87%, with nearly 30% of shares sold short. Two kinds of catalysts likely fueled this week's rally. Positive macroeconomic news may have caused shorts to cover, while drawing in retail investors to speculate in more risky names. Additionally, company-specific developments for all three companies may have fueled above-average gains. So what On the macroeconomic front, Wednesday's Consumer Price Index (CPI) report showed lower-than-feared inflation for the month of July. Many took the numbers as a sign that the post-pandemic inflation fever may be breaking. After all, this was the first monthly report in a long time that showed no month-over-month inflation. When fears of inflation recede, stocks go up -- but economically sensitive, beaten-down, and riskier stocks usually go up by much more. That includes meme stocks like these three. Marketwide factors aside, all three companies recently reported earnings: SmileDirectClub reported this week, and fuboTV and AMC did so last week. Did they report good numbers? No. In fact, all three stocks missed analyst revenue estimates. And all three showed operating losses, although AMC and Fubo did report better losses than anticipated. That doesn't really seem like a recipe for big stock gains. However, market sentiment is now focused on what could go right, and each company did announce some interesting new business developments. AMC Entertainment Holdings On its earning call last week, AMC announced it would issue current shareholders a special dividend consisting of one new preferred stock unit, which will trade under the ticker symbol "APE" and come with a non-fungible token (NFT). This is somewhat strange, considering it's not clear what value would be ascribed to the new preferred unit versus the common stock. Still, the preferred unit will begin trading on Aug. 22, so some may have been buying AMC this week in anticipation of the preferred stock dividend. Why create a new preferred stock class? Unfortunately, it doesn't seem to be for a great reason. AMC management had promised its shareholders last year that it wouldn't issue any new shares and dilute the stock further, after a series of equity raises in 2020 and early 2021 to get through the pandemic. However, it looks as though AMC wants to raise more money, and can get around this constraint by issuing preferred shares, then raising more money by selling more of the preferred share class. It appears management is attempting to appease common stockholders by giving them preferred shares ahead of a possible capital raise -- although no one has any idea of the price at which AMC will issue the new preferred units, or how much common stockholders may ultimately be diluted. fuboTV Meanwhile, fuboTV had two big pieces of content-related news this week. In one, SportsGrid Network, the nation's first 24/7 streaming network dedicated to sports wagering, announced that it would launch on fuboTV. This came after Fubo's earnings report last week, in which the company announced it was putting its own sportsbook unit up for "strategic review." However, it appears Fubo is still leaning into sports wagering, just not pursuing this costly endeavor itself. That bit of positive news followed Monday's announcement of a multiyear first-look deal for unscripted content from Ryan Reynolds' Maximum Effort production company. As part of the first-look deal, Fubo issued Maximum Effort $10 million worth of FuboTV common stock. The two deals seemed to generate optimism that Fubo could attract differentiated content to its platform, and its stock soared as a result. SmileDirectClub Finally, SmileDirectClub was the only of the three to report earnings this week, and investors had a roller-coaster ride. The company reported second-quarter results on Tuesday night, showing misses on both revenue and net losses per share, while also lowering its full-year guidance. The stock plunged on Wednesday, although that was the day of the CPI report, when the overall market soared. However, the stock then made a U-turn and surged nearly 25% on Thursday on no significant news. That was likely the result of a big short squeeze. The short squeeze could have been mere profit-taking by short-sellers. It could also have been a reaction to management's announcement of the new Smile Maker 3D scanning app, set to be unveiled in the fourth quarter or the first quarter of next year. The AI-powered smartphone app will allow prospective customers to scan their mouths, then receive a detailed treatment plan. Currently, those customers either have to visit an approved dentist or a Smile Direct retail store, or make an at-home imprint to begin the process. So the new app -- the result of years of development -- could greatly streamline the process and lower customer acquisition costs. Now what There is a bull case to be made for each of these stocks, but the path is narrow. AMC Entertainment investors need to believe that movie theaters will continue to improve their finances as the economy reopens, but that's pretty uncertain -- some might say unlikely -- in the age of streaming. The idea for a sports-focused online streaming bundle is gaining fuboTV subscribers off a small base, but it faces intense competition from larger, well-funded peers, such as Alphabet's YouTube TV. And SmileDirectClub is facing a difficult macroeconomic environment, as well as fierce legal resistance from state dental boards. More worrisome for AMC and SmileDirectClub, they each have problematic debt loads, which are huge risks in this rising interest-rate environment. So even with these eye-opening moves this week, investors should be aware that none of the three stocks is "safe." Despite still being well below their all-time highs, each remains a highly speculative investment. 10 stocks we like better than AMC Entertainment Holdings When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and AMC Entertainment Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of August 11, 2022 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Billy Duberstein has positions in Alphabet (C shares) and has the following options: short August 2022 $86 puts on Alphabet (C shares). His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), and fuboTV. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off. Today’s Big Picture Asia-Pacific equity indexes ended today’s session down across the board. India’s Sensex ended the day essentially flat, down 0.06%, China’s Shanghai Composite and Australia’s ASX All Ordinaries declined 0.54% and 0.55%, respectively while Japan’s Nikkei fell 0.65%, Taiwan’s TAIEX dropped 0.74% and South Korea’s KOSPI declined 0.90%. Hong Kong’s Hang Seng led the way, down 1.96% on a broad selloff led by Health Technology and Health Services names while Transportation and Communications sectors provided the only relief. By mid-day trading, major European equity indices are down across the board and U.S. futures point to a positive open later this morning. At 8:30 AM ET, the much anticipated July Consumer Price Index (CPI) report was released: The headline figure for the month was expected to fall to 8.7% from June’s blistering 9.1% reading with core CPI that excludes food and energy ticking higher to 6.1% in July vs. 6.0% the prior month. The actual numbers show that inflation hit 8.5%, and core inflation was 5.9%. With the national average retail price for a gallon of gas falling through late June and July from its June 14 high of $5.016 per gallon per data from AAA, forecasters had expected the month over month decline in the headline CPI for July. The July Employment Report also showed wage inflation ran hotter than expected during the month. Let’s also keep in mind that we will be facing a “wash, rinse, repeat” cycle when it comes to inflation data and expectations for the Fed given tomorrow’s July Producer Price Index report. Data Download International Economy Producer prices in Japan rose by 8.6% YoY in July, compared with market forecasts of 8.4% and following an upwardly revised 9.4% the prior month. While marking the 17th straight month of producer inflation, the latest reading was the softest since last December. China's annual inflation rate rose to 2.7% in July from 2.5% in June and compared with market forecasts of 2.9% but even so the July figure marked the highest reading in the last year. The country’s Producer Price Inflation figure for July eased to a 17-month low of 4.2% YoY from 6.1% the prior month and less than the market consensus of 4.8%. Annual inflation rate in Germany was confirmed at 7.5% YoY for the month of July, down slightly from June’s 7.6% reading but still above the March and April figures of 7.3%-7.4%. The annual inflation rate in Italy slowed to 7.9% YoY in July from June’s 8% reading matching expectations for the month. While energy prices declined, prices for food and transportation rose at a faster pace. Domestic Economy This morning we have the usual Wednesday weekly reports for MBA Mortgage Applications and Crude Oil Inventories from the U.S. Energy Information Administration. At 10 AM ET, Wholesale Inventories for June will be published, and the figure is expected to rise 1.9%. While investors and economists will keep more than a passing interest in those reports and data, as we discussed above, it will be the July Consumer Price Index report at 8:30 AM ET that will shape not only how the US stock market opens today, but also expectations for the Fed’s next course of monetary policy action. The U.S. Energy Information Administration (EIA) expects domestic production of crude oil, natural gas and coal will all increase next year compared with this year. It forecast US crude production rising 6.7% to an all-time annual high 12.7M bbl/day in 2023 from 11.9M bbl/day in 2022, US natural gas output climbing to 100B cubic feet (cf)/day from 97B cf/day, and US coal production inching up to 601M short tons in 2023 from an expected 599M this year. The EIA also modestly increased its 2022 average nationwide gasoline price forecast to $4.07/GALLON vs. $4.05 if called for last month. It now also sees 2023 prices at $3.59/GAL vs. its previous forecast of $3.57. Markets Stocks continued in their holding pattern waiting for the latest CPI print save for some fundamental stories pushing Technology names and small caps around. The Dow and the S&P 500 were down slightly at 0.18% and 0.42%, respectively while the Nasdaq Composite dropped 1.19% and the Russell 2000 closed down 1.46% on the day. Energy names led the way yesterday but were overpowered by Technology and Consumer Discretionary sectors. Here’s how the major market indicators stack up year-to-date: Dow Jones Industrial Average: -9.81% S&P 500: -13.51% Nasdaq Composite: -20.14% Russell 2000: -15.83% Bitcoin (BTC-USD): -52.08% Ether (ETH-USD): -55.38% Stocks to Watch Before trading kicks off, CyberArk (CYBR), Fox Corp. (FOXA), Jack in the Box (JACK), Nomad Foods (NOMD), Vita Coco (COCO), Tufin Software (TUFN), and Wendy’s (WEN) will be among the companies issuing their latest quarterly results and guidance. At 9 AM ET, Samsung (SSNLF) will hold its Galaxy Unpacked 2022 at which it is expected to introduce new Galaxy foldable smartphone models, a new Galaxy Watch, and Galaxy Buds. Shares of advertising technology platform company The Trade Desk (TTD) jumped after the company reported quarterly results that topped expectations and guided current quarter revenue above the consensus forecast. The RealReal (REAL) reported a smaller than expected bottom line loss for its June quarter as revenue for the period rose 47.2% YoY to %154.44 million, topping the $153.99 million consensus. However, the company issued downside guidance for both the current quarter and 2022. Revenue for the September quarter is now expected to be $145-$155 million vs. the $164.3 million consensus; for the full year of 2022, revenue is forecasted to be $615-$635 million vs. the $653.7 million consensus. Shares of Coinbase Global (COIN) moved lower after it reported June quarter results that missed top and bottom line expectations. Revenue for the quarter fell 63.7% YoY as Total trading volume fell 53.0% YoY and 29.8% sequentially to $217 billion. Monthly Transacting Users (MTUs) grew 2.3% YoY but fell 2.2% sequentially to 9.0 million. For the current quarter, Coinbase sees the number of MTUs trending lower sequentially and total trading volume to be lower compared to the June quarter. Shares of Sweetgreen (SG) tumbled in aftermarket trading last night after the company missed quarterly revenue expectations, lowered its 2022 forecast, announced it will lay off 5% of its workforce, and downsize to smaller offices. ChipMOS TECHNOLOGIES (IMOS) reported its July revenue was $65.1 million, a decrease of 19.4% YoY and down 7.7% MoM. Taiwan Semiconductor (TSM) reported its July revenue increased 49.9% YoY to NT$186.76 billion, which equates to a 6.2% MoM improvement. Electric vehicle subscription startup Autonomy placed a $1.2 billion order for 23K electric vehicles with 17 global automakers, including BMW (BMWYY), Canoo (GOEV), Fisker (FSR), Ford (F), General Motors (GM), Hyundai (HYMTF), Lucid Group (LCID), Mercedes-Benz (DDAIF), Polestar (PSNY), Rivian (RIVN), Stellantis (STLA), Subaru (FUJHY), Tesla (TSLA), Toyota Motor (TM), VinFast, Volvo Car (VLVOF) and Volkswagen (VLKAF). IPOs As of now, no IPOs are slated to be priced this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page. After Today’s Market Close Bumble (BMBL), CACI International (CACI), Coherent (COHR), Dutch Bros. (BROS), Red Robin Gourmet (RRGB), and Walt Disney (DIS) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. On the Horizon Thursday, August 11 Germany: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August US: Weekly Initial & Continuing Jobless Claims US: Producer Price Index – July US: Weekly EIA Natural Gas Inventories Friday, August 12 Japan: Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August China: China Thomson Reuters Ipsos Monthly Global Primary Consumer Sentiment Index - August Eurozone: Industrial Production - June US: Import/Export Prices – July US: University of Michigan Consumer Sentiment Index (Preliminary) – August Thought for the Day “The release date is just one day, but the record is forever.” ~ Bruce Springsteen Disclosures Tufin Software (TUFN), CyberArk (CYBR) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Index Canoo (GOEV), Fisker (FSR), Lucid Group (LCID), Rivian (RIVN), Tesla (TSLA), Vita Coco (COCO) are constituents of the Tematica BITA Cleaner Living Sustainability Screened Index The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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