SG America's Just Bought A Massive 1,064,805mln Shares Of THIS Meme Stock, CPI Brings Good News...

Goodmorning goodmorning!

This Wednesday feels extra good as the S&P 500 and Nasdaq have officially clinched a nice four day winning streak, hallelujer! With all three indexes being up +2.67%, 2.43%, and +1.37% the last five trading days (S&P 500, Nasdaq, and Dow), the Fed’s PPI reading yesterday definitely gave us that nice extra jolt of confidence we needed. 

(Source: Business Insider)

However, now with the new CPI data we received this morning, we officially have validation that the inflation trend is clearly decelerating and converging towards the Feds 2% target, as CPI came in lower than expected by a nice 0.1%. Noice!

(Source: CoinPedia) 

This marks 16 straight months that the shelter CPI has moved lower on a YoY basis, from a peak of 8.2% in March 2023, to 5.1% today. Translation: Jerome Powell’s “Vlocker” impersonation seems to be paying off, peeps.

Now of course, we won’t know how the market will react to this until this morning’s trading session begins (You know, because, Wall Street Logic 101 is about as unpredictable as a fish out of water), but given a nice PPI reading yesterday, combined with the new CPI data, things are looking extremely promising going forward. 

(Source: Giphy) 

Additionally, you know the market sentiment is ramping back up when people make investment decisions that really don’t make a lick of sense in the first place. Like SG Americas Securities latest transaction for example.

SG Americas Securities who? Yeah that's exactly what I thought, but apparently this Paris, France based investment bank is jumping ahead of a potential September rate cut by snagging a jaw dropping 1,064,805 million shares of nothing other than Gamestops stonk brother: AMC. 

(Source: MarketBeat)

Now before you degenerate “HODL” reddit traders start running for your buy buttons on Robinhood, let me be clear, this wasn’t a spontaneous purchase by SG. No, this just adds to their current position, for a nice 1,894.0% increase during the 2nd quarter - which is absolutely bonkers. 

So given this recent investment, what’s the reasoning you ask? Well, as of now, no one knows for sure. But given that AMC's recent earnings report was about as uplifting as a trip to the dentist, SG Americas may be seeing something that we don’t. 

(Source: Giphy) 

For instance, AMC posted a $1.03 billion revenue, which sounds great until you realize it’s a 23% drop year over year. Yet, on the other hand, AMC’s adjusted earnings loss of 43 cents per share, matched Wall Street’s consensus but still left a lot of shareholders clutching their pearls. 

So as we can see, nothing really groundbreaking there, which leads us to the 800 pound elephant in the room. AMC’s debt of $2.45 billion. Sure, they managed to refinance, but with that much liability on the table, it’s like rearranging deck chairs on the Titanic at this point. 

(Source: Benzinga) 

Now with that said, the company might be celebrating their cash reserves growing from $624 million to $770 million, cool story bro, but given where the company is at financially right now, it’s not much to move the needle with. 

But what about the analysts you ask? Well, let’s just say their enthusiasm isn’t exactly contagious. Macquarie recently lifted their target price from $3.50 to $4.00 but still maintains an “underperform” rating. Citigroup also raised their target from $3.10 to $3.20, but guess what? They slapped a “sell” rating on the stock while matching the consensus rating of “reduce,” - with an average price target of $5.37. 

(Source: InvestorPlace) 

So with all of that said, what’s SG Americas seeing that we aren’t? Well, I’m not saying they have access to Stocks.News, but given that all 17 of our technical indicators are screaming “Strong Buy”...

While all 15 moving averages on AMC’s daily chart are showing an uptrend continuation, the price action is the most promising element to AMC’s stock right now.

Honestly, when it comes to technical “confirmation”, you can’t get much better than that. But still, making speculative investments solely on technical’s is about as dumb as a box of rocks. However, with that said, from our perspective here, it looks like SG Americas is simply executing the ultimate “BTFD” on this meme stonk. That’s it.

(Source: Giphy) 

With America’s inflation deceleration under way (thanks to the recent PPI and CPI data), rate cut possibilities are getting stronger and stronger. And given, the last time we had cuts, with nice stimmy checks as a bonus, meme stocks were the craze of the decade. 

Now of course, that’s all speculation on my part here. But until, we receive more information as to why SG Americas grew their position over 1,000% in the second quarter, well then that’s all we got for now. 

(Source: Giphy) 

In the end, it’s clear AMC isn’t making waves in its fundamentals as a company, however, the price action (where all degenerate traders reside) is definitely gaining more steam. But even though SG Americas is betting big on AMC, please don’t be ignorant. 

Sure keep your eyes on the stock, but as we all know with small caps and meme stocks - while they can make investors quick money, they can “cap yo a$$” with losses just as fast. So just keep that in mind going forward. In the meantime, stay frosty friends, and hey… enjoy the fact that Jerome Powell may actually know what he’s doing after all. 

(Source: Giphy) 

At the time of this writing, AMC is down -0.81% on the day (down - 16.45% YTD). 

Stocks.News does not hold any positions in companies mentioned in the article.