08. June 2021 | 10:15 CET
The Power of Digital Media - AMC, ProSieben, Tencent, Aspermont
Sell in May and go away...in 2021, it has not yet worked. The weather in June is much warmer and the markets are rushing from one all-time high to the next. The DAX reached a new high yesterday at 15,732. The mood was outstanding, especially when it came to vehicle values. However, the excesses were slightly slowed down at AMC Entertainment. Now that the Company has placed three capital increases, some calm has returned. We look at a few special situations in this advanced bull market.
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ISIN: US00165C1045 , DE000PSM7770 , KYG875721634 , AU000000ASP3
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
AMC Entertainment - What madness!
AMC was again at the center of another wave of buying by retail investors last week, discussing the stock on forums like Reddit's "WallStreetBets" and breathing new life into the "meme stock" phenomenon. GameStop exemplified how to quickly gain 1,600% in January by running hot on forums. The share price has halved again after the high but is still trading at a dizzying height.
It looks like things are going to be a little different for AMC. The Company's stock was up "only" a little over 83% last week. The movie theater operator is already up 2,160% this year, giving some major institutions paper losses of nearly USD 4 billion, according to the latest available data from S3 Partners. The high volatility in the stock is making life difficult even for options traders.
A Reuters analysis of options data and interviews with market participants, including a Wall Street banker and a fund manager with USD 30 billion in assets, show that some institutional investors have entered into complex options trades. They are all aiming for AMC stock to turn down someday, too. Typically, irrational moves of this magnitude do not last for a long time, and some professional traders are betting against it.
Meanwhile, AMC Company management warns that its stock is "grossly overvalued" and has already issued more than USD 1 billion in new shares. Providers such as Melvin Capital lost half of their invested assets in GameStop shorts in January, and overall hedge fund losses total about USD 11 billion, according to data from research and analysis firm Ortex. It will be interesting to see where this madness will lead.
ProSiebenSat.1 - A long way to go, little imagination
ProSiebenSat.1 Media SE is one of the leading European media groups. Its core business consists of advertising-financed free TV, which is received in around 50 million households in Germany, Austria and Switzerland. With 15 free and pay-TV stations, the Company is well-positioned to reach all commercially relevant target groups in German-speaking countries.
ProSieben can be found on all digital platforms and is in permanent competition with RTL Luxembourg and Axel Springer Medien. With the U21 final at the weekend, they landed a hit in prime time with up to 39% market share. The share price took a bit of a hit last week after the broadcaster expressed skepticism about possible mergers at its annual general meeting. The shares lost 5.5%; after deducting the dividend discount, the loss was still 3%. The Italian media giant Mediaset is very interested in ProSieben and, as a significant shareholder, advocates closer cooperation between the two media companies.
From a chart perspective, the EUR 16.50 mark should provide solid support, while the EUR 19 mark must first be overcome on the upside before the share price can continue to rise. At present, there is no urgent need for action.
Tencent - Another IPO in the USA
There is also strategic news from Tencent. The Chinese media and software giant presents its next exit. Kanzhun Ltd, the owner of Chinese online recruitment platform Boss Zhipin, is looking to raise up to USD 912 million in its US IPO, venturing into the market at a time when many other companies prefer to wait on the sidelines.
If the Company can place shares at the high end of the price range, it would be the second-largest IPO by a Chinese company in the US since software firm Tuya Inc.'s USD 947 million IPO in March. Several Chinese companies have recently put their plans to go public in the US on hold as investor sentiment toward growth companies, especially from Asia, has soured and IPOs have been unsuccessful. Insurtech firm Waterdrop Inc. has fallen 30% below its IPO price since its debut in early May. Waterdrop launched on the stock market despite warnings from the Chinese government, and an official investigation into its business model from Beijing has already been threatened.
The Tencent share can currently defend the range of EUR 60 to 66 only, with difficulty. A chart-technical buy signal is waiting at the EUR 72 mark. At EUR 55, it should end on the downside.
Aspermont Ltd. - Strong growth in the user base
Aspermont Ltd. from Australia is a specialist in digital content and marketing. The media group represents a well-connected capital market companion for many companies in the commodities sector. Aspermont earns through ever-increasing advertising revenue, which comes from its growing user base. This is scaling in its purest form because as the reach increases, the Company's development and IT costs are spread over more and more paying users. Currently, the average revenue per user (ARPU) is about USD 1,000 per year.
In recent years, Aspermont has undergone a comprehensive restructuring at all company levels - corporate, operational and technological. More than 250,000 monthly active users now browse the website, generating a total of 7.5 million digital touchpoints. Currently, they have about 4 million active users in the global mining sector, with 22% of customers from Australia but only a manageable 7% from Asia. The size of the Asian market, which has not yet been addressed, shows enormous potential for the coming years.
Aspermont intends to introduce new types of subscription and service platforms in the coming years. Given the size of the global audience already in place, real-time analysis of behavioral data alone could enable another expansion step into the world of Big Data. Regardless of whether this data is used in-house or sold on the market, a future-oriented profit model arises from both levels. It is also intended to set up a digital financing platform.
The Aspermont share is still far too cheap, with a capitalization of around AUD 67 million. The stock can be traded liquid in Germany and is an absolute bargain compared to some NASDAQ data giants like Palantir or Qualtrics.