Over the past two weeks, we’ve seen some “meme” stocks gain momentum against the backdrop of retailer-launched short squeeze.Stocks of companies such as blackberries (TSX: BB)(NYSE: BB) And AMC Entertainment (NYSE: AMC) Last month, they increased by 71% and 365%, respectively. After the short squeeze, the two stocks will cool down, so let’s see which one is better for now.
BlackBerry shares are traded at premium
BlackBerry withdrew from the smartphone space a few years ago because it lost market share to tech giants. Apple, Samsung, And many Chinese manufacturers. Since then, the company has focused on providing software and security solutions to enterprises.
However, BlackBerry suffers from lower revenues and lower profit margins. BlackBerry revenue in 2021 fell by more than 10% to US $ 883 million as the pandemic affected the company’s QNX revenue from automakers. In addition, BlackBerry continues to lose market share in growth areas such as cybersecurity, thereby impacting the top line.
BlackBerry claims that QNX software is installed on 175 million vehicles, but it does not generate significant revenue from this area. In the automotive space, BlackBerry aims to increase revenue per vehicle through the adoption of a broader system, a long-term effort. According to BlackBerry, the backlog of royalty revenue for the QNX system is US $ 450 million.
BlackBerry manages despite the decline in revenue in 2021 Increase free cash flow We have a cash balance of US $ 74 million, up 29% year-on-year, and US $ 804 million at the end of the year. The company has reduced its debt by US $ 240 million, resulting in a savings of US $ 16 million in interest expense. Over the last four years, BlackBerry’s gross profit has improved by 11 percentage points, and last year it was able to generate US $ 167 million in adjusted EBITDA.
The company is also moving to a subscription-based model with annual recurring revenue of $ 468 million in 2021. However, analysts predict that BlackBerry sales in 2022 will decline 10.3% to $ 824 million. -The monthly average price target for BB shares is $ 7.75, which is 44% below the current trading price.
AMC stocks have potential for significant downside
AMC shares were trading at $ 2 per share earlier this year. Individual investors first launched a short squeeze of AMC stocks in January 2021 and by the end of the month pushed their share price to $ 20. Since then, AMC Entertainment’s share price has fallen to $ 12 in less than a month, reaching a record $ 72.62 in June 2021. AMC’s share price has fallen 30% from its all-time high, but has so far surged 2,000%.
AMC is a theater chain and part of a declining industry in a pandemic. Its sales fell from $ 5.47 billion in 2019 to just $ 1.24 billion in 2020.But analysts Expect an increase in profits In 2021, it will increase 94% to $ 2.41 billion, and in 2022 it will increase 98.8% to $ 4.8 billion. It can be estimated that sales in 2022 are still low compared to 2019.
The shift to online content consumption is accelerating within COVID-19, which could impact the recovery of AMC and its peers in the future. Another reason for concern is the huge debt of a $ 11 billion company compared to its $ 815 million cash balance.
Analysts have set a 12-month price target for AMC shares at US $ 5.25. This is 80% below the current transaction price.
This article represents the opinion of a writer who may disagree with the “official” recommendation position of the Motley Fool Premium Services or Advisors. We are Motley! Asking investment papers, even our own papers, can help you think critically about your investment and make decisions to be smarter, happier, and richer. As a result, we may publish articles that may not match recommendations, rankings, or other content. ..
Motley Fool owns shares in Apple and recommends Apple. Motley Fool recommends BlackBerry and recommends the following options: A long Apple call in March 2023 for $ 120 and a short Apple call in March 2023 for $ 130. A stupid contributor, Aditya Raghunath, does not have a position in any of the shares mentioned.
Blackberry vs. AMC: Which Meme Stock Is the Better Buy?
https://www.fool.ca/2021/06/11/blackberry-vs-amc-which-meme-stock-is-a-better-buy/ Blackberry vs. AMC: Which Meme Stock Is the Better Buy?