Three Things to know (Jan. 26th)
“In investing, you can be really right but temporarily quite wrong.” - Jim Chanos
1. Gamestop’s epic short squeeze doesn’t stop as the company's stock surges Monday morning, only to plummet 40% shortly thereafter.
“A head-scratching David and Goliath story is playing out on Wall Street, over the stock price of a money-losing video game retailer. An army of small-pocketed, optimistic investors are snapping up shares of GameStop. That's in direct opposition to a group of wealthy investors who are betting on the retailer's stock price plunging. The resulting action is wild: GameStop's stock soared nearly 145% in less than two hours Monday morning, only for the gains to disappear quickly afterward.” (CBS)
2. Social Capital founder’s SPAC spree continues as he announces two personal SPAC investments in smart lockmaker Latch and solar lender Sunlight.
“Serial blank-check dealmaker Chamath Palihapitiya has doubled down on SPACs and has now participated in at least half a dozen deals that his own blank-check vehicles aren’t even involved in. Latch and Sunlight were just two of the five companies that announced they were going public via a SPAC on Monday, in deals worth a combined $15.4 billion including debt. The flurry of mergers come after a record year for blank-check companies that shows no sign of stopping.” (Bloomberg)
3. AMC taps into investors’ newfound risk appetite to buy more time to ward off bankruptcy in a $917 million financing round.
“Investors have proven willing to support struggling companies during the pandemic, even those that have been hit hard by social-distancing and travel restrictions, such as theaters, cruise lines and hotels. With the deals announced Monday, AMC Chief Executive Adam Aron said the possible bankruptcy filing the company had previously warned about was now “completely off the table.” The company said its financial runway has now been extended deep into 2021 and that while an increase in cinema attendance seems likely, the future course of the coronavirus meant that cash needs remained uncertain.” (WSJ)
