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Today in the Market (1/5/2024)

Good Morning! On Friday, stocks experienced volatility, ending their longest streak of straight weekly gains since 2004. This was prompted by fresh economic data that further fueled the discussion on when the Federal Reserve may reduce interest rates.

Even though the week of returns ended the streak, the main indexes still finished today in the green, with the S&P 500, Dow Jones, and Nasdaq up by 0.18%, 0.07%, and 0.09%, respectively.

A NEW LOW...

The theater chain AMC (AMC) had a significant decline, reaching a new record low by closing the session at $5.17 per share, with the stock having seen a decline of almost 15% in the last four trading sessions. The stock has seen a continuous decline as the corporation persists in issuing further shares, reducing the value of investors’ holdings, all while facing an imminent debt burden.

So what causing this new decline? AMC recently announced that it has engaged in a series of private negotiations to swap about 3.25 million Class A shares, valued at $22,500,000, in order to repay its outstanding notes due in 2026. On top of that, AMC said that it has the option to participate in such deals in the future, but it is not required to do so.

Let’s look back on AMC! The stock peaked during the meme era by hitting an all-time high of $339.05 in early June 2021. Since August 2023, the stock has seen a decline of about 80%, dropping from a trading price of just over $40 per share. So, is there any hope? Well… AMC is anticipated to disclose its financial performance for the fourth quarter on January 28th, which the company exceeded its revenue projections for the third quarter due to the success of the movies “Barbie” and “Oppenheimer.”

HUGE BROADCAST DEAL!

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The NCAA revealed an exciting $920 million broadcast agreement with ESPN, which specifically emphasizes women’s sports (along with tennis and volleyball, which are offered for both men and women, along with several other sports). ESPN will also be broadcasting Division II and III basketball games for the first time.

Let’s break down this huge deal! According to the NCAA, the women’s March Madness tournament, which makes up about 57% of the contract and costs $65 million a year, is the main driving force behind the eight-year agreement. Why now? The current valuation of the association in ESPN’s latest deal is tenfold higher than its previous valuation. This significant increase may largely be due to the highly anticipated championship game of the previous year, which attracted a record-breaking audience of about ten million people.

What else? Industry executives have speculated that the NCAA may separate women’s basketball into an independent agreement, similar to what it has done with men’s basketball, due to the sport’s growing profitability and popularity. However, the NCAA decided to keep women’s basketball as part of the package, most likely due to the more cutthroat market for sports media rights that has resulted from a decline in traditional television viewership.

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