At the height of Stonks Mania, there were two companies that seemingly benefitted from a mad rush of individual, retail investors — GameStop and AMC Entertainment.
A quick recap for those who may have forgotten: back in January, retail investors (non-professional) started buying up large percentages of GameStop and AMC stocks. The basic rundown is that a sea of retail investors decided to push back against the big guys (institutional investors), effectively calling out their plans to bet against companies like GameStop and AMC. This is called short stopping.
For a full breakdown of what exactly happened and why it matters, I highly recommend Elizabeth Lopatto’s excellent write-up over at The Verge. But all we really need to understand is that millions of people started buying AMC stock, and effectively helped AMC survive the most tumultuous time in company history.
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The effect of this dash, currently being investigated by the Securities and Exchange Commission (SEC), is still uncertain. What’s adamantly clear, however, is both GameStop and AMC have a new army of bosses (shareholders) they have to please. AMC is leaning into it full stop.
On the company’s recent earnings call, CEO Adam Aron acknowledged that AMC now has “an army of passionate, interested individual shareholders, some three million strong,” adding that at last count it was closer to 3.2 million. This will change how AMC interacts with new management, as Aron put it. No longer will Aron prioritize CNBC spots, which are difficult to attain in general. Instead, Aron is touting websites like Reddit and YouTube as the best way to reach their new shareholder base.
“Just go on Twitter, just go on Reddit, just go on YouTube,” Aron said. “Read what these people write. They love AMC.”
Or, to put it another way, a large percentage of AMC’s owners live on the internet, so that’s where he’ll be, too.
“You’re going to see a lot more outreach to literally millions of investors in our company, and it’s going to be quite public,” Aron said, adding that he’s “started tweeting again.”
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For analysts and non-retail investors, Aron’s love for a relatively new base of shareholders may be concerning. How does the shift in power affect business decisions that AMC makes, for example?
While AMC is starting to come out of its worst period, the company is also entering a new, completely unfamiliar world. Here’s how one analyst poised that exact question to AMC’s top executive team: “If management thinks that increasing the share authorization is the best move for the company but the new shareholders don’t, then what is the way forward from there?” Aron, as is standard for the chief executive, didn’t mince words.
“If management thinks something and the owners of our business think something else, in the free market system, guess who wins? Guess who always wins?” Aron said. “The owners of the business — because management works for the owners.”
There are ways that management can “try and persuade” the shareholders about a strategy, but Aron made it apparent that he believes they’ll work together to ensure AMC’s success continues. That includes ensuring their interests are heard and respected.
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For example: gorillas. AMC Cares, the company’s charity arm, is donating $50,000 to the Dian Fossey Gorilla Fund, which goes to helping gorilla wildlife in Central Africa. Aron is also donating an additional $50,000 from his own pocket to the fund. Why? Because AMC’s new investors have embraced the cause, so AMC will, too.
“I work for them. So by definition, their interests and passions are important to AMC,” Aron said, adding that “many of our investors, too, have embraced Dian Fossey’s cause and have raised substantial monies for it.”
Sure, retail investors may believe in saving gorillas. Raising money for the foundation is a noble cause, to be clear. But retail investors, many of whom may hang out on subreddits like r/wallstreetbets and talk in memes, may just love the idea of finding a cause that relates to “apes strong together,” a saying that is used when individual retail investors are “bullish on heavily-shorted stocks like GameStop,” according to Investopedia.
Is it possible that the CEO of AMC picked a foundation because of a meme generated on r/wallstreetbets that more than three million of his new shareholders have embraced? Absolutely. Is leaning into a meme base generated on a subreddit a good business plan? I certainly don’t know.
But remember: the internet is real — and the effects of a “meme economy” are starting to play out in the real world.
