Jim Chanos, a big short seller, said on Tuesday that the fundamentals of AMC Entertainment Holdings, the largest US cinema chain operator, had deteriorated and that the company could no longer be profitable because of the epidemic and the impact of streaming on the traditional film industry.
"the truth is that the situation at this company has gotten worse since the outbreak," Chanos said. So obviously something has changed. This change is streaming. "
Mr. Chanos says his company, Kynikos Associates, holds a small bearish position in AMC, accounting for less than 1% of its assets.
AMC reported second-quarter results Monday after trading, with a net loss of $344 million and revenue of $445 million, better than expected.
But Chanos said: "compared with the second quarter of 2019, AMC's second-quarter revenue fell by 70 per cent. Their movie ticket sales are down 75%. "
Mr Chanos also warned that retail investors who "participate in the game" at a later stage could end up "paying for it" as more red flags emerge in speculative stock markets.
"the problem with more retail participation is that it always seems to happen at the end of each cycle," Chanos said. There were no retail investors when the stock market hit bottom in 2009, and they were not there after the dotcom bubble burst in 2002. They must have been there in 1999. In my opinion, the problem with the past few cycles is that some sponsors and insiders have cashed in and made a lot of money when retail investors buy. "
The historic recovery brought about by the COVID-19 epidemic has attracted a record number of novice retail investors to participate in the stock market. Many people are attracted to the most volatile and riskiest areas of the market for huge short-term returns, including AMC and game stationsStocks whose business is in trouble.