Shiba Inu Is Great for AMC Entertainment but Not for SHIB-USD Holders

InvestorPlace’s Brendan Rearick recently discussed how AMC Entertainment (NYSE:AMC) could take Shiba Inu(CCC:SHIB-USD) to new heights after AMC CEO Adam Aron surveyed Twitter users about whether AMC’s theaters should accept the cryptocurrency for tickets and other in-house purchases. 

The back of a Shiba Inu puppy in a camping tent

Source: Shutterstock

Approximately 80% of the 145,000 responses said the company should start accepting Shiba Inu as payment. 

For AMC, accepting the cryptocurrency makes sense for two reasons. As for holders of SHIB-USD, I’m having a harder time understanding what’s in it for them. 

Shiba Inu Transactions Would Use an Appreciating Asset

As I write this, Shiba Inu is up 67.894,745% in 2021 and 70.1 million percentage points over the past year. So if SHIB-USD were to do the same thing in 2022, it would be a ludicrous move on the part of a SHIB-USD holder to part with their valuable asset. 

It’s been a while since I’ve been to a movie but let’s say a ticket costs $15. That’s approximately 2,632 Shiba Inu coins to pay for my ticket. In a year, ticket prices might go up to $16, but a single coin would be worth $39.38 based on a repeat performance of its return in 2021. That’s a date night you might come to regret. 

So, those 2,632 SHIB-USD coins would be worth $103,645. And while it’s possible that Shiba Inu could go the other way over the next year, should the cinemas return to pre-pandemic levels, I’m sure it’s a risk Aron and the board is willing to take. 

First off. How many people will use Shiba Inu coins to pay for their movie tickets? It’s already allowing customers to buy gift cards with Bitcoin (CCC:BTC-USD) on the company’s website.

As my colleague Brendan pointed out, it will eventually be set up so that customers can pay for everything the theater offers, whether it be tickets, gift cards, or food & beverages. In addition to Bitcoin, Litecoin (CCC:LTC-USD), Ethereum (CCC:ETH-USD), and Dogecoin (CCC:DOGE-USD) are also going to be accepted at its theaters as payment.

It’s never a dumb idea to provide the customer with as many payment options as possible. That ensures that you have a greater chance of making a sale. However, until cryptocurrencies mature and their volatility subsides, I doubt that holders of these coins would risk potential profits for a night out. 

On the other hand, if 10% of AMCs pre-pandemic (2019) revenue of $5.5 billion was paid for with Bitcoin, for example, the $550 million in Bitcoin used back then to buy tickets — an approximate average 2019 price of $5,000 per bitcoin and 110,000 Bitcoins — would today be worth $7.2 billion or 1,200% more. 

Inflation Rears Its Ugly Head

The second reason it makes sense for AMC to accept cryptocurrencies such as Shiba Inu is that it’s a hedge against inflation. With rising prices for almost every input cost that AMC has combined with some hesitancy on the part of Americans to return to the movie theaters, controlling one’s cost structure is a vital way to ensure you generate profits. 

Hedge fund billionaire Paul Tudor Jones recently told CNBC that he views Bitcoin as a much better hedge against inflation than gold. 

“It would be my preferred one over gold at the moment,” Jones said in a CNBC interview on Oct. 20. “Clearly, there’s a place for crypto. Clearly, it’s winning the race against gold at the moment.”

I don’t know if you can say the same thing about Shiba Inu, but the fact that it’s accelerating at such a fast pace, it would seem prudent to allocate up to 10% of AMC’s cash and cash equivalent assets in fast-moving cryptocurrencies.

But, of course, should interest rates start moving higher, the desire to do this would likely diminish as safer guaranteed investments started paying more interest for parked cash. 

From every angle, it makes total sense for AMC to accept cryptos, including Shiba Inu. As for holders of Shiba Inu, I don’t see a reason you would give up potential moneymakers to see a movie. It makes little sense in the current environment.

The Bottom Line

When I last wrote about Shiba Inu, in October, I suggested that the allure of riding SHIB-USD to a penny is hard to resist. Unfortunately, for most investors, that thirst for profit can have terrible consequences.

However, a company such as AMC, which likely has systems in place to ensure it doesn’t overdo it, could use SHIB-USD to add value for shareholders while hedging against inflation. 

If you own SHIB-USD, I can’t think of a single reason why you would use its coins to pay for your trip to the movies. The advantages of this business-to-customer relationship flow totally to AMC. If you want to go to the movies, pay with your greenbacks. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. 

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