AMC Entertainment (NYSE:AMC) has struggled for some time, with attempts to find a silver lining coming up short. Recent efforts, like promoting Taylor Swift’s Era’s Tour film, may not save this company from what appears to be an eventual delisting. Indeed, Moody’s downgraded AMC’s credit rating to ‘junk’ in April, and plenty of analysts continue to tout a very bearish outlook for the company. Overall, AMC stock is among the publicly traded theater chains that face powerful secular headwinds that nearly all near-term catalysts won’t resolve.
Although theaters have already made comebacks after three years of being closed, AMC is still having a hard time generating profits. Let’s discuss why selling your AMC holdings is the best thing to do now.
Recent AMC News
AMC Entertainment’s stock received a boost with Taylor Swift’s concert film, ‘Taylor Swift: The Eras Tour,’ earning over $200 million globally. The cinema chain’s shares rose 8.9% to $9.96 as it was the film’s distributor.
On X, AMC CEO Adam Aaron highlighted that Taylor Swift’s concert film had become the highest-grossing in history, surpassing ‘Justin Bieber: Never Say Never.’ The film was approaching ‘Michael Jackson’s This Is It’ in global box office earnings.
Additionally, AMC Entertainment attracted attention as it announced the global screening of “Renaissance: A Film by Beyoncé” starting December 1. Tickets were available for purchase internationally from November 9, with U.S. customers already able to buy tickets through various channels. The film received rave reviews and drew over 2.7 million fans worldwide during the RENAISSANCE WORLD TOUR.
These catalysts are certainly what retail investors have jumped on as reasons to buy this stock. However, AMC’s financial picture remains dire, and it’s unclear whether the boost AMC will receive from this box office slate will be enough to right the ship.
CEO Adam Aron Faced Tons of Backlash After Blackmail Issue
Adding to the turmoil for its shareholders, CEO Adam Aron was embroiled in a “complex criminal” extortion attempt.
Aron disclosed that he was a victim of an intricate extortion scheme, reporting it to law enforcement and seeking legal counsel to combat the false allegations about his personal life. His decision to confront the blackmail, despite the risk of personal embarrassment, was driven by the belief that he needed to stand against it, given his resources.
With the scandal involving sexually explicit messages spread, AMC’s stock dropped 13% since it came to light on October 12.
Some argue Aron displayed questionable judgment, and questions have arisen about his tenure. While this is certainly among the more eyebrow-raising stories I’ve seen of late, it’s also one that should provide investors with pause when it comes to this former high-flying meme stock.
Be Cautious with AMC Stock
While I have already shared my bearish sentiment on AMC, I still think it’s worth cautioning investors holding onto this stock to brace themselves. AMC is set to announce its third-quarter results on November 8, and analysts anticipate a mixed bag of predictions for this report. AMC Entertainment unveiled its Q3 2023 financial results release date for November 8, 2023.
Wall Street analysts expect a 44 cents per share loss and estimated revenues at $1.23 billion, indicating a 27% year-over-year increase.
We’ll see how these numbers come in, and they certainly could surprise the upside (if the movie above slate pays out). However, I’m of the view that, given the rather bearish tone investors have taken in recent weeks, a reason may be found to sell, and many investors may choose to do just that.
On the date of publication, Chris MacDonald 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 InvestorPlace.com Publishing Guidelines.
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November 06, 2023 at 08:51PM
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