Markets: AMC looks to refinance debt, Alibaba stock seesaws, AMD shares jump, Chinese EV stocks rise

Yahoo Finance's Jared Blikre reports on the SEC filing indicating that AMC plans to refinance some debt this year, Alibaba shares seesawing amid fears some investors may cut stakes soon, AMD stock rising after being named a 'top pick' by Goldman Sachs, and Chinese electric vehicle stocks jumping on big delivery reports.

Video Transcript

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JULIE HYMAN: This is "Yahoo Finance Live" on this first trading day of 2022. And we've got some movers that we're watching here this morning. One of them is AMC. The shares are up just about 1%, but this is after Adam Aron, the CEO, tweeted about his New Year's resolution for this year. He talked about refinancing some of the debt to reduce interest expenses, push out some debt maturities by several years, and loosen covenants-- in other words, to try to strengthen the company's balance sheet.

He says there's no guarantee of success, but we'll try very hard to get this done. We're always thinking of creative ways to make AMC's future more secure. He tweeted this. And also, interestingly, the company then filed with the SEC, effectively with the tweet, to make it sort of official here, I suppose, which always sort of cracks me up because it's very 2020s, isn't it, Jared, that companies communicate--

JARED BLIKRE: It is.

JULIE HYMAN: --in that way. So when we look at AMC in the last year that it had in strengthening its balance sheet, he has been really masterful at playing into the meme stock, retail stock traders' sentiments, if you will.

JARED BLIKRE: Yes, I would say he's capitalized on the retail revolution, if you want to call it that, better than most CEOs. And I think GameStop is definitely in that group, too. But they're still kind of a black box. We're not sure what's going to happen with their big turnaround strategy.

But here's AMC. And I did-- I thought I had the the tweet in the Interactive, but it looks like I'm just have to read it here. It says, "AMC took on debt at high interest rates to survive. That was in 2021. If we can in 2022, I'd like to refinance some of our debt to reduce our interest expense, push out some of the debt maturities by several years, and loosen covenants."

And that last part, "loosen covenants," when you have these loans, a lot of times they come with covenants. And those are things the company has to do. And they have to abide by that. And if they don't, well, there are penalties for that. And a lot of them are financial.

So we talk about sometimes covenant-lite loans. And those are loans that don't have the traditional covenants in them, make them a little bit dangerous, a little bit more dangerous than they otherwise would have been, a little bit riskier. For that they command a higher yield. But you see those when liquidity is high.

And I think this is going to be a theme for this year as well. We're going to see tremendous M&A. The Fed is not hiking just yet. So liquidity is still awash in the markets. And I think that we're going to see more acts like this. And so AMC, yep, they're doing their job. They're trying to reduce their expenses for investors, in this case, interest expenses. And then finally, to your point, yeah, they're filing with the SEC their tweets, and just kind of par for the course, being such a highly regulated market that we see.

JULIE HYMAN: Yes, most definitely. Just a sign of the times, although I know that is what companies do now. And as we look at it on the Interactive, by the way, it fell 6% on the last trading day of last year, which is also interesting.

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There you have the Opening Bell here this morning. And ringing the Opening Bell is Sharon Bowen. She is chair of the Board of Directors of the NYSE.

All right, so kicking off a new year here. And indeed, we do have stocks that are trading higher as we get underway on this Monday morning. The NASDAQ a little bit of a delay there in the open, but Dow, S&P showing some strength here this morning.

I think I mentioned earlier on the last five trading days of 2021, we saw the S&P 500 up 0.85%. And Jared, as you know, you have the indicator, basically if you have the Santa Claus rally, which is those seven sessions, then you can get the January effect, which is January potentially being higher. If January is higher, then historically the rest of the year does tend to be as well. But we'll see if all of that does end up playing out.

A couple other movers that we're watching that we just quickly wanted to touch on, Alibaba is an interesting one here this morning, Jared. This stock is trading lower. And apparently there was a big rise in the Alibaba ADRs that were being converted to Hong Kong shares last week. The shares were pretty much more sharply lower in pre-market trading. Now, as you can see, they're little changed. So I guess there's a little bit of a back-and-forth jockeying here.

JARED BLIKRE: Yeah, and just to get at some of the technicalities of what we're talking about with ADRs, when you have a foreign company like Alibaba and they want to sell their shares and list their shares in the US, they have to jump through all the hoops that an American company would. But when it comes to this specific stock, they'll issue-- they'll take, let's say, seven or ten shares. And they'll package it into one unit that trades in the US. And we don't call it stock. We call it ADRs, American Depository Receipts.

And so what we saw, this story that we're talking about, a number of people in large blocks are converting their US ADRs back into the Hong Kong shares, where they're natively listed back in China. And that has been associated with drops in the price that we've seen. So if we go to the YFi Interactive here, I want to show Alibaba on a one-year basis. This is a stock that's been cut in half, at the forefront of the tech problems that a lot of these tech companies have had in China.

And that began with Ant Financial way back in 2020 in the midst of the pandemic. They were supposed to IPO. China put the brakes on that. Last year they went ahead with Didi. And China didn't like that. And so now they're recalling it.

And this doesn't necessarily-- this latest news with Alibaba doesn't necessarily mean that they're going to be doing the same thing with them. I think, however, that we're at the beginning of a massive reorientation of the capital markets into the Western and the Eastern. And this is just the first step. So hard for me to think that we're going to see anything less than continued carnage in these stocks, although they'll probably have fits and starts of you short covering rallies and whatnot. But nevertheless, I'm pretty bearish on these stocks longer term.

JULIE HYMAN: Yeah, and it also depends, obviously, on the regulatory environment in China as well. One of the other stocks that caught our eye this morning is Advanced Micro Devices. We saw big moves in the semiconductor industry in 2021. And Goldman Sachs says things are going to get less sort of blanket, if you will, in 2022. In other words, you maybe have to be a little bit more selective within the sectors that did so well last year.

So AMD, one of the top picks named at Goldman Sachs. Marvel Technology and Micron also on that list. But AMD, it looks like it is the top of the top, if you will. And the shares are rising about 2% this morning, Jared.

JARED BLIKRE: Yeah, and I think that's another theme that we're going to hear a lot of this year. It's going to be winners and losers. It's not just going to be, all right, everybody needs chips, so all the chip stocks are going to rise. There's going to be a little bit more selective selection that takes place.

And let's go to the YFi Interactive. We're seeing a lot of green on our heat map to begin the year. Nvidia is up 3%. Taiwan Semi in the lower left. That is up 5%.

But we're talking about AMD here. So let's just take a one-year look. Now, this is a stock that's pretty close to its record high we've had as recently as November, December, up 61%. This is a stock that is clearly an industry leader and has really been eating Intel's lunch.

You want to take a look at a stock, admittedly still in a turnaround strategy, but we just got-- I think we learned late last year they're divesting Mobileye, which was their Israeli-based intelligent autonomous vehicle unit. They do some of the sensors and some of the AI work for that kind of driving. And Intel is spinning them off. They're going to double down on fabrication. And we'll have to see where that takes them.

But this has not been a growth stock in some time. You take a look at a max chart, still trying to recoup those late '90 losses here that it suffered during the tech boom. So Intel kind of on one side of the pendulum, AMD, Nvidia on the other. Taiwan Semi probably going to be another huge winner that I would say, Julie.

JULIE HYMAN: I mean, look at those big gains to start the year. And I'm noticing also as we get underway the NASDAQ is already up 8/10 of 1%. So stronger than the futures would have indicated for NASDAQ, and just kind of continued gains for large-cap tech here, Jared.

JARED BLIKRE: Yeah, so I'm looking at the NASDAQ 100 heatmap right now on the YFi Interactive. Only Microsoft is in the red, and very slightly at that. And just kind of, it looks like, some drift here. So aside from Tesla, which is up 8% and Nvidia up 3%, a lot of these gains have often come in January, as they do, not in fits and starts. But we just kind of see a melt up.

So the reasoning behind-- getting back to the January effect, the reasoning is if stocks can melt up towards the end of the year and in the beginning of the first year when you really don't have that much liquidity, they can really rally when you have traders coming back to the desk. That really doesn't happen until next week, a lot of people still taking this week off. But I'm glad you're here, Julie, so we can talk about this stuff.

JULIE HYMAN: I'm glad I'm here, too. And, I mean, obviously, Tesla on that NASDAQ 100 chart really stood out, because it's up 8% after that blockbuster delivery number. We don't have entire clarity on how Tesla did in China, which has been more of a volatile road for it, I think we can say. It has had some ups and downs there. But the Chinese EV makers also were out with their deliveries. NIO, Li and XPeng all out with their numbers. NI and Li-- NIO and Li, excuse me-- are both trading higher this morning, XPeng pulling back a little bit.

JARED BLIKRE: Yeah, I'm looking at the YFi Interactive. NIO is up 3%, but this is a stock that had a pretty rough 2021 as well. So let's take a look at a one-year view, you can see down 32%. I think there are a couple of different things at play here, not just the fact that it is an electric vehicle maker that must compete with Tesla and others. That's a Chinese stock.

And so this kind of fits into our narrative. A lot of these Chinese stocks, when they trade in the US as ADRs, they have much higher multiples than their Hong Kong counterparts do. And because of that, when you see the, I guess, the fluff kind of being sucked out of them, those multiples being taken out of them here, that's what you get, is a lower-priced stock. But I don't know what's going to happen with NIO in particular with respect to the Chinese authorities and the whole delisting thing. But I think it's instructive that this is one of those stocks that really had a rough time.

Also in the EV space, a lot of these stocks peaked in January and February of last year, including Tesla. Now, Tesla was able to reclaim those highs and get to record highs. But a number of these stocks didn't.

So give me one more minute here. I just want to show what this looks like on a one-year basis. And I think it's instructive how many, how many of these-- and a lot of these are SPACs. Look at that, Lordstown Motor in the lower-- in the lower right, that's down 82%. Workhouse Group or Workhorse Group, 77%. QuantumScape 73%. So all of these SPACs really took it on the chin over the last year. I'll throw this one in there, too--

JULIE HYMAN: Yeah, really interesting.

JARED BLIKRE: Luminar, right?

JULIE HYMAN: Yeah, yeah, and to your point, a lot of that rollover happened later in the year after they-- some of them at least had some initial surges when they first came to market. But electric vehicles, definitely going to be one of the big themes continuing that we're going to watch coming up this year.