Down the Rabbit Hole She Goes
by Zach Marsh on Jun 4, 2021
While the general market seemed dressed in its summer cruise wear, the amped-up meme momentum stocks continued into overdrive. Joining AMC this week at the glutton’s banquet were some high flying names from month’s past. Blackberry was up 40%. Nikola Motors was up 12.6%, Workhorse was up 38.4%. Each of these have been previously loved stocks that had recently fallen out of favor, but now, for whatever reason, the love affair has been rekindled. It’s like everyone one on Reddit wants to relive last summer. Even old bankrupt Hertz stock is feeling the 2020 love. Given that current shareholders will receive warrants worth 4% of the new company, the current valuation of the legacy shares is $930 million which would imply a future valuation for the new and improved Hertz of $23 billion. That seems a bit AMC if you ask me.
Speaking of AMC, their CEO continued unleashing/unloading shares on the public. And guess what? The public didn’t care. They responded by saying, “I’ll take those shares and have some more, please.” Not to be outdone management responded by saying, “Ok, will you take another 23 million shares?” It seems like no matter how hard management tries to show the buyers that their company is not worth anywhere near that amount, the more enthusiastic the buyers get. The longer I linger on the subject the more baffled I get.
Fortunately, the day and the week are almost over. Before I get too worried drawing parallels between meme-stock valuations, hyper-valued tech stocks and runaway inflation and wondering if all this implies that the dollar is going the way of the Weimar Deutsche Mark, I think I’ll just sign off. Have a wonderful weekend.
Thanks for reading,
Zach and Dave
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