The Value Investor : Oh boy, I been waiting for a comment like this. I’ll gladly explain because none of the apes here know anything about fundamentals! First, let’s look at their market cap, the market cap is the price of all shares outstanding if you were to buy them all outright at the current stock price. It’s standing at ~2.4b. This tells us nothing so far, but this is essentially the price you are paying for the company (proportionally). if we head on over to their fundamentals (financial statements) you will see they have not been profitable since 2018 in their income statements. Particularly, in the past few years they’ve amounted losses of around 7b. This is a red flag because for a 2.4b company to lose 7b , well even if you were 5 you could see how that doesn’t make sense. If we’re talking fundamentals this should immediately raise our suspicions and we need to check a few things. First, their balance sheet. According to their most recent quarter’s balance sheet they have 740m in current assets, 500m of which is cash. Current assets are important because they can be used to pay off current liabilities or debts. Not enough current assets or cash means having to take on more debt or sell more shares. If we head on over to their total assets it stand at 8.85b. Now that we see all their money and asset lets scroll down to the liabilities. They have current liabilities of 1.71b. RED FLAG ALERT . They don’t have enough money to pay the bills that are due within the coming year.This means they need to issue more shares, or take on more debt! Also they’re total liabilities are higher than their total assets. RED FLAG ALERT ! This means if you were to sell off the company for all its worth you would not have enough money to pay all its debtors. This also means the shares you have are fundamentally useless and hold no fundamental value. You are holding a company that does not make money, and owes a lot of money.

The Value Investor The Value Investor: But wait, what if theaters become profitable again like before COVID? Unfortunately , this wouldnt do you much. They owe too much money and are actually worth negative money, the only thing keeping the stock price up is marketing and perception. Let’s pretend they hit record breaking profit of an average of 200m every year. Even after 10 years they would have a lot of debt. I can assure you, their debt probably does not have the best interest rate either. Furthermore even if they do this, you’re still being dilluted as a shareholder. Pretend AMC is worth $100, and there are 10 shares. Each share is worth $10. Let’s say the company makes $5 a year. In that case each share is worth $10 and generates EPS (earnings per share) of $0.5. However, let’s say AMC decides to issue 5 more shares. They still make 5, but now that 5 is divided by 15 instead of 10. The EPS drops, and because the earning are used to reward shareholders, the company cannot reward shareholders as much through share buybacks and dividends. Now that $0.5 eps goes down to $0.0333. If you bought their shares, you were making a 5% return, now you are making a 3.3% return.
This may seem long, but its a very basic overview on why AMC is fundamentally trash. There are more reasons but its not worth going into considering it doesn’t even have any strand of light or hope as an investment decision. Your best hope is that someone acquires AMC like Disney. But they’d be better off waiting for their bankruptcy then buying their assets for pennies on the dollar.

The Value Investor : I hope this answers your question. Never forget, when you are buying a stock, you are buying a piece of a business. The goal of a business is to make money. Any business that ultimately fails in doing this and has no credible path in achieving this, is fundamentally doomed to failure both as a business and an investment. Hope everyone will learn a lesson from the meme stock debacle.

The Value Investor : $NVIDIA (NVDA.US)$ shouldn’t even have a $1 trillion market cap. it is not a sustainable price, it’s just going to plummet. The amount of money NVDA makes is far too little to justify its market cap. If NVDA profit stopped growing and stayed constant. It would take the company over 200 years to make enough profit to equal its market cap. That’s basically what the company’s P/E is telling you. For a mega cap high growth company, a P/E of 30 is already considered generous, 200+ is ridiculous. If you look historically at companies like this, they all underperform. They’re stock price growth far exceeds the company’s actual money coming in. Look at literally every tech stock that survived the internet bubble through 2000-2001. $Intel (INTC.US)$ $Cisco (CSCO.US)$ still haven’t passed their all time highs. $Microsoft (MSFT.US)$ underperformed the market if you bought it at its peak. We already saw it with Tesla, we saw it with Palantir, and we already saw it with much of the hype stocks. At some point overvalued stocks will plummet because their evaluation is simply unsustainable. You may as well just buy t-notes or use a saving account. A 4-5% no risk yield is better than a 200 P/E company.

The Value InvestorOP sTone83: $Wingstop (WING.US)$ is not a value stock. It is not even remotely close to being a value stock. In fact, I would consider shorting it because it is so grossly overvalued. Worst part is, shareholders have negative equity. Meaning, if you buy $Wingstop (WING.US)$, you are literally buying yourself into debt. The company’s balance sheet is terrible. Also, it has a $6b evaluation, but made like $53m last year. $6b / 60m = 100. As it currently stands unless this company has some hyper growth it would essentially take 100 years for it to make enough money to be able to pay for its current market cap with its current profits (or in other words to double your money). Obviously it would not take this long for real because revenue and profits are growing, but a 15-20% revenue growth on a restaurant business does not justify a P/E of 100. At least if I were to pay a premium for a company it should be something like $Apple (AAPL.US)$ or $Amazon (AMZN.US)$ but paying a large premium for a company that makes 1% or less of its market cap in earnings and/or free cash flow is a horrible idea. You may as well put your money into treasury notes, savings accounts, and bonds, at least you can get 5% risk free. I’m not even going to look at $Starbucks (SBUX.US)$, I don’t think there’s a need to.

The Value InvestorOP Mohamad Ghadafi: I am not currently holding the stock on any of my real portfolios. You can check my paperfolio, I don’t keep track of every stock’s performance because it’s too complicated to do so across all my different portfolios and trading apps. Every stock in my paperfolio is something I either have, or want to continue having for the next 5-10 years. There are stocks that I own that are not in my paperfolio, and the percentages don’t match my actual portfolios’ distribution, but overall its a good non weighted metric for gauging my stock picks over a long period of time. Paperfolio
I do not recommend copying what ever I buy or using my advice unless you are committed to value investing. I largely buy into undervalued stocks with negative sentiment, this can lead to negative performance for months, or years at a time. This historically tends to lead to outperformance, but value stocks tend to underperform for sometimes long periods of time before they ultimately outperform and make up for their losses. This requires investing with money you don’t immediately need, and it requires extreme patience and a masochistic mentality where you enjoy seeing markets down 50% in the red. It’s a very boring form of investing - unless the market is bleeding - in which case its really fun. You will 100% lose money if you simply try value investing or try buying “value” stocks without understanding value, or that it is a lifelong commitment that at times may not substantially reward you for years or even a decade.