AMC Stock Forecast: AMC trades in red. Will the downtrend continue?
AMC Entertainment Holdings Inc (NYSE:AMC): Latest Price
AMC Entertainment Holdings Inc is trading 4.6% lower at $ 32.38 in the current trading session
AMC Stock Forecast: Performance Chart
Read: LUCID Stock Forecast
AMC Stock Forecast: Technical Analysis
The AMC Macro Fractal, exploration, proof, and why it matters. (Time stamps in desc.)
AMC Stock Forecast: Latest News and Tweets
Chart (1D) of $AMC (the name I was told I was “an idiot” and “insane” to put on short) now 55% off its intraday June highs with inevitably more puking ahead..
If it can’t hold $32 at a min (June gap up), expect total implosion..
“Apes” on my TL have gotten awfully quiet.. 🤔🤷♂️
AMC Stock Forecast: Latest Videos
AMC Stock | What I’m Thankful For!
AMC Stock Forecast: Background
AMC Entertainment Holdings Inc (abbreviation for American Multi-Cinema) is an American movie theater chain headquartered in Kansas and claims to be largest in its segment in world. Founded in 1920 and headed by Adam Aron, the company got listed on New York Stock Exchange in 2012. The Chinese conglomerate Wanda group owned a majority stake in the company.
In March 18,2020 AMC announced closure of all its theaters due to COVID 19 pandemic and company experienced darkest phase in last 100 years as per top executives. But since then, it is reviving due to new funding and re-opening of cinema theaters.
An Unusual Last Year for AMC Entertainment
- March 2020 set the world rocking negatively impacting all the major industries, but cinema and entertainment industries were worst affected with AMC not being out of mix and forcing them to shut all their theaters and giving all their employees forced leave.
- But, AMC has seen a turnaround since start of this year and has given more than 1200 percent return. However, this rally is not backed by financials and is claimed to be another crazy trading by reddit traders for meme stock.
- AMC Entertainment rode the wave of “meme stock” trading on 2nd June and stock spiked to all time high of $72.62, a breathtaking upside from $2 price on 4th January 2021.
- AMC reported it has sold 8.5 million newly issued shares to Mudrick Capitals, a favorite of reddit traders and that fueled frenzy trading in the stock. The company raised $230.5 million through the sale, and plans to use that capital to upgrade theaters and deleverage its balance sheet.
- The company launched a program called AMC investors connect in early June that is specifically designed to turn shareholders into customers, thereby taking benefits from unseen rally.
CEO Sells Shares to Plan Retirement
- AMC CEO Adam Aron sold 625,000 shares on Tuesday, and plans to sell shares of this much quantum in near future under a selling program filed with Securities and Exchange commission. The sale is part of executive estate planning.
- The shares were sold at an average price of $40.53, at a valuation of $25 million. AMC shares reacted to news and fell 4 percent on Wednesday to close at $38.29.
- The filings with Exchange gave Aron the right to sell the stake of 1.25 million shares over the coming days or weeks. Aron currently holds 400,000 shares of unrestricted shares and 3.3 million shares of unvested restricted stocks and he needs to wait for some time so that restricted stocks vests to complete the sale of 1.25 million shares.
- Aron turned 67 this year and is reported saying that prudent planning suggests he should diversify his assets fearing potentially soaring capital gains tax rates by Congress and significant changes to what can be passed to one’s heir.
Q3 Earnings Beat Estimates and Crypto Payments Starts for AMC
- During the third quarter, the company saw revenue rose to $425.1 million from $62.9 million in the year ago period and food and beverage sale also surged to $265 million from $29 million in a year ago period.
- Diluted EPS stands at -0.44 per share and as operating costs outpaced its revenue, company posted a loss of $224 million for the quarter.
- Good news is that AMC theaters have joined the crypto bandwagon and company’s customers can do online payment via Bitcoin, Ether, Bitcoin Cash and Litecoin and Dogecoin is expected to be next cryptocurrency to be added in the pipeline.
AMC Stock Forecast: Future Outlook for AMC Entertainment
Cinema and Entertainment industry is a tricky business these days after COVID 19 pandemic. Even as economy recovers now, AMC and other traditional movie theater chain will have to compete with streaming services as some movie releases either bypass theaters or are released online at the same time. Also AMC did not report encouraging revenues in last three years prior to COVID 19 and net income barely crossed positive territory even in years 2016,2017 and 2018.
With some positive news of cryptocurrency being added to foray and some negative news of CEO Aron selling more than a million shares, the future of AMC looks dicey. Add to it the growing inclination towards online streaming like Netflix and increasing operating costs towards maintaining theaters, the future outlook looks bleaker than ever.
Investors should wait for some time before adding AMC to their portfolio and should consider the financial performance of the company as an important factor apart from some Reddit stories before investing.
Writer: Vineet Agarwal