AMC Entertainment is living up to its name as a great entertainer. Watching the stock chart is even more fun than sitting through an action-packed Hollywood blockbuster.
Swept up in the “meme stock” craze along with GameStop, Blackberry, and others, AMC is rallying like crazy. Its share price was recently up nearly 3,000% to more than $60 per share since the beginning of the year. (Today, the price dropped by a third to roughly $40 after the company said it would capitalize on the mania by issuing 11.5 million new shares. Then the stock rebounded close to $70 before settling near $50 by market close.)
Obviously, something is off. The fundamentals of AMC’s debt-laden, cash-burning, equity-diluting business run counter to its insane market value, as many analysts point out. But in the era of meme stocks, that doesn’t seem to matter. What matters is firing up the base—the day-trading hordes who read Reddit, gobble up shares, and chant “AMC 2 Da Moon.”
Adam Aron, AMC’s chief executive, is milking the frenzy—and making hundreds of millions of dollars in the process. He has made appearances on YouTube investing shows watched by the self-described AMC Army. He has pledged fealty to the company’s more than 3 million retail shareholders, which now account for more than 80% of total stockholders. His latest move: spinning up a perks program, called AMC Investor Connect, that offers popcorn freebies and first-looks at upcoming films to shareholders.
AMC isn’t the first company to offer such benefits. Berkshire Hathaway, IBM, and Ford investors get discounts on everything from Geico insurance to computer equipment to cars. Carnival, Norwegian, and Royal Caribbean cruise lines grant shareholders on-board credits. 3M and Kimberly Clark offer up gift boxes filled with items like Post-It Notes and Kleenex tissues. But something about AMC’s offering—the blatant cash grabbiness, the meme stock mania, the playing to the masses—seems to break new ground.
If the meme stock craze is cutting edge, the tech that enables AMC’s perks program is far from it. The website requires people to “self-identify” as shareholders on its website. In other words, anyone can sign up, as my colleague Chris Morris notes. It’s unclear how the company will authenticate who is a shareholder and who isn’t. Your faithful columnist joined under the pretense of being a shareholder, though he is not. (If they terminate my account after reading this column, I won’t blame them.)
It’s not a very rigorous security check.
AMC’s kludgy implementation is one thing, but you could look further out at where this trend might lead. Cryptocurrency investors point out that bitcoin-like tokens—snippets of code held in digital wallets—could, in time, have a big impact on how businesses, like AMC, manage relationships with their owners-customers-fans.
Denis Nazarov, a former partner at Andreessen Horowitz’s a16z crypto fund, predicts this sort of technology will eventually become commonplace. “Programmable equity is the future,” he commented on Twitter. “Tokens and NFTs make it much easier” to turn people into perk-reaping part-owners of businesses, he added, referring to non-fungible tokens, the digital collectibles that hit it big earlier this year.
Nazarov is currently building Mirror.xyz, a decentralized social network that lets readers effectively invest in the works of writers they support. The startup just raised $10 million from Union Square Ventures, Andreessen Horowitz, and other venture capital funds at a $100 million valuation, The Information reported this week. Mirror hosts weekly writing competitions, and the winners get to create publications on the site. (Here is where I shamelessly ask for your vote.)
Jesse Walden, founder of the crypto-focused Variant Fund and an early Mirror investor, explains the opportunity this way. “They’re experimenting with this concept that I call patronage-plus,” says Walden, who formerly, with Nazarov, cofounded Mediachain, a blockchain startup the two sold to Spotify in 2017. People have the “potential to profit from their patronage,” he continues, noting that this is “uniquely enabled by turning crowdfunders”—people who contribute funds to projects—”into fractional owners [of writerly ventures] through NFTs,” tokens that effectively represent their interests.
In other words, people can claim partial stakes in projects. For their efforts, they receive NFTs—held in their digital wallets—that entitle them to kickbacks and rewards. If what Mirror is building is a harbinger of the future of social networks, then what AMC has built in Investor Connect is the equivalent of former President Donald Trump launching his since-shuttered “communications” platform, which turned out to be a low-tech blog. My money is on Mirror’s approach winning out longterm.
Why? Because crypto would make it much harder for people to lie about things, like being members of the AMC Army—as yours truly did. NFTs prove you’ve got skin in the game.
Robert H. Hackett
In the last Ledger poll, we asked you to weigh in about Bitcoin’s neck-breaking volatility. The winner was the YOLO option—”you only live once”—by a longshot, per the results below.
Here’s another poll for you.
DECENTRALIZED NEWS
Credits 🚀
Bitcoin swings less, indicating recovery? ... Coinbase green-lights Dogecoin with a $1.2 million giveaway ... Coinbase will let you spend crypto using Apple Pay ... Kraken launches app ... Google eases crypto ad ban ... Cathie Wood says Bitcoin is unstoppable ... SoFi SPAC soars ... Circle raises $440 million from Fidelity et al. ... NFT means Nobel (Prize) Fungible Token ... Musk gives Samsung the "Baby Shark" bump ... The SEC can't stop him even though he loves going rogue ... Venmo adds some privacy controls ... Lumber—and fake lumber—are top-performers ... People love lotteries ... Norton LifeLock to add Ethereum mining ... Meet Thailand's first unicorn ... It's boom times for e-commerce in Vietnam ... Argentina loves Bitcoin mining ...
Debits 🐻
May was a bad month for crypto ... People are trying to get around China's crypto ban ... Economic sanctions are no match for crypto ... Gold rallies on inflation worries ... Ransomware hits a meat supplier and transit authority ... The life of a ransomware negotiator ... Cops bust a marijuana farm Bitcoin mining operation ... Biden prepares a $6 trillion budget and to crack down on crypto investor tax evaders ... Apple Card had a 6-hour outage ... Fake Instagram giveaways ... WSJ: "Bitcoin’s Reliance on Stablecoins Harks Back to the Wild West of Finance"
FOMO NO MO
The debate over Bitcoin exchange-traded funds, or ETFs, will be an important indicator of how far Washington is willing to let digital currency markets flourish amid growing questions about whether crypto serves any value to society or is just a speculative fad that carries real risks for investors.
Bitcoin is the biggest of the virtual assets, which unlike the dollar are distributed outside of government control and often operate on a decentralized basis. The pending proposals for Bitcoin ETFs would allow more investors to gain exposure to the digital currency without having to purchase it directly.
The funds would essentially replicate the prices of Bitcoin and other cryptocurrencies. Investors could buy shares of the funds and sidestep the need to have so-called digital wallets to hold the digital currency. The complications of handling and trading the virtual assets would be left to fund managers.
Lots of Wall Streeters are pushing for the U.S. Securities and Exchange Commission to approve a Bitcoin ETF, which would make it easier for people to invest in cryptocurrency and stash shares in their retirement accounts. Politico explains why Bitcoin ETF applications from Fidelity, Anthony Scaramucci's SkyBridge Capital, and others are getting jammed inside the gears of government. As the article notes, Gary Gensler, the new head of the SEC, has emerged as "a clear crypto skeptic," coming as a surprise to many insiders "who were hoping he’d be more amenable to Bitcoin after teaching and researching digital finance at MIT."
This article offers a good overview of all the competing interests at play. Bottom line: If you want to invest in cryptocurrency, it's probably best just to "be your own bank," as the industry refrain goes.
BUBBLE-O-METER
>80%
That's the share of stock in the movie theater chain AMC Entertainment that is owned by retail investors, according to CEO Adam Aron. AMC is one of several meme stocks—like GameStop, Blackberry, and even the cryptocurrency Dogecoin—that have rallied on enthusiasm from hordes of Reddit-reading, Robinhood-slinging day traders. $AMC has surged nearly 3,000% to more than $60 per share this year, as my colleague Bernhard Warner notes. (Shares were trading around $50 a pop at press time.) Some party pooper analysts, like David Trainer, CEO of investment research firm NewConstructs, say the business is worthless.
THE LEDGER'S LATEST
A running list of companies whose market cap is topped by Dogecoin’s by Chris Morris
German researchers test ‘money for nothing’ UBI on middle class in latest experiment by Christiaan Hetzner
SoFi flies in SPAC-tacular Nasdaq debut by Rey Mashayekhi
Your father’s stock market is never coming back by Joshua Brown
India’s indecision on a crypto crackdown leaves investors and exchanges in limbo by Biman Mukherji
Move over crypto—the hot trade is in these commodities by Bernhard Warner
As Bitcoin’s swings get smaller, some crypto investors see signs of recovery by Joanna Ossinger
Circle’s raise is the latest in the crypto cash rush by Rey Mashayekhi
Why China is reining in the renminbi by Clay Chandler and Nicholas Gordon
Meet the ransomware negotiators you hope you’ll never need by Adrian Croft
Can Ether overtake Bitcoin? Its resilience in May’s crypto crash shows it might happen by Joanna Ossinger
Will stocks keep going up this year? by Ben Carlson
Sorry, Bitcoin: CFOs say they aren’t adopting crypto by Lance Lambert
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
MEMES AND MUMBLES
Trevon Brown, a.k.a Trevon James, one of the promoters of Bitconnect, a Ponzi-scheming crypto biz, tweeted this after the SEC named him and four others in a lawsuit last week. The project—immortalized by the hype-man Carlos Matos in this hysterical meme—raised about $2 billion during 2017 by selling unregistered securities to the public, the SEC alleges.
Wasa wasa wasa wasa wasa wasa WASSUP, Securities and Exchange Commissioooooooon!
Interested in joining Fortune's The Ledger as a writer? We could use another pair of (diamond) hands. Contact robert.hackett@fortune.com.
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