Insights

Why AMC Entertainment Is in a Hole Once Again Today

What happened
After rallying from a noontime deficit yesterday to finish in the green, AMC Entertainment Holdings (NYSE: AMC) is starting off in a bigger hole today. Shares of the movie theater operator are down 4.6% at 10:28 a.m. ET on Wednesday on no discernible news for the company.
Yesterday’s action, both the morning deficit and the afternoon comeback, was not driven by any special news, and it’s largely been that way with the stock since last year, though the pattern has been consistently lower.
Image source: Getty Images.

So what
After rallying to over $72 a share a year ago, the stock has lost 80% of its value, with a few feints to the upside. The most recent occurred in March when shares doubled after it took a 22% ownership stake in gold and silver miner Hycroft Mining. It then began giving back all of the gains it made and today shares trade hands at about the same price they did before the announcement. 
Investors are likely awaiting AMC’s earnings results next Monday. Although they will undoubtedly be dramatically better than they were a year ago, they’re not likely to be back to pre-pandemic levels. 
There have only been a couple of big-name movies released during the quarter, The Batman being the most recent at the beginning of March, which grossed over $338 million in box office receipts for the month.
Now what
Investors who bought in a year ago when AMC Entertainment was trading for just literally pennies per share are still doing well for themselves, despite the loss in value over the ensuing 12 months. It’s those who entered during the trading frenzy and thereafter who are hurting the most.
A lot of internet and social media chatter contends AMC stock is being held back by various dark forces working behind the scenes. However, it’s more likely the movie theater industry has been in bad shape for years and streaming video is only making it worse. As the biggest theater operator, AMC will be the one most impacted by it. With a heavy debt load to service, the movie theater operator is not a financially healthy company.
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

What happened

After rallying from a noontime deficit yesterday to finish in the green, AMC Entertainment Holdings (NYSE: AMC) is starting off in a bigger hole today. Shares of the movie theater operator are down 4.6% at 10:28 a.m. ET on Wednesday on no discernible news for the company.

Yesterday’s action, both the morning deficit and the afternoon comeback, was not driven by any special news, and it’s largely been that way with the stock since last year, though the pattern has been consistently lower.

Image source: Getty Images.

So what

After rallying to over $72 a share a year ago, the stock has lost 80% of its value, with a few feints to the upside. The most recent occurred in March when shares doubled after it took a 22% ownership stake in gold and silver miner Hycroft Mining. It then began giving back all of the gains it made and today shares trade hands at about the same price they did before the announcement. 

Investors are likely awaiting AMC’s earnings results next Monday. Although they will undoubtedly be dramatically better than they were a year ago, they’re not likely to be back to pre-pandemic levels. 

There have only been a couple of big-name movies released during the quarter, The Batman being the most recent at the beginning of March, which grossed over $338 million in box office receipts for the month.

Now what

Investors who bought in a year ago when AMC Entertainment was trading for just literally pennies per share are still doing well for themselves, despite the loss in value over the ensuing 12 months. It’s those who entered during the trading frenzy and thereafter who are hurting the most.

A lot of internet and social media chatter contends AMC stock is being held back by various dark forces working behind the scenes. However, it’s more likely the movie theater industry has been in bad shape for years and streaming video is only making it worse. As the biggest theater operator, AMC will be the one most impacted by it. With a heavy debt load to service, the movie theater operator is not a financially healthy company.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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