Can Movie Merchandise Save AMC Stock?
AMC Entertainment (NYSE:AMC) stock is up slightly on news the theater chain is selling movie-themed merchandise. CEO Adam Aron thanked investors who suggested the idea.
AMC stock opened Dec. 1 at about $7.48 per share, a market capitalization of $3.8 billion. The company is not profitable, and its revenues are still well below pre-pandemic levels. But small investors keep hoping, spurred by its role in last year’s meme-stock rally.
Is AMC Stock a True Underdog Story?
Professional investors have been increasingly critical of Aron’s cheerleading. One hedge fund manager recently called shareholders a “paranoid investing death cult.”
The problem is that after scoring paper gains early in 2021 against short sellers, small investors refused to sell. The stock is now down 90% from its highs.
Comments at Stocktwits and Reddit’s r/WallStreetBets have also turned negative, laughing at those who refused to sell last year, hoping it would go “to the Moon.” Hedge funds have reduced their interest in AMC stock.
Aron, however, continues to hold out hope, even as the preferred shares sold as APE (NYSE:APE) fall below $1. He is selling non-fungible tokens (NFTs) after that market has collapsed. He is telling investors to expect big sales of AMC-branded popcorn for home. Indeed, he sells AMC as an underdog story right out of the movies.
What would help AMC most would be more movies. Aron told producers to “pick up the pace” of releases at his last earnings call. Investors see Amazon (NASDAQ:AMZN) heeding the call, putting up to $1 billion in theatrical film releases starting next year.
The Amazon move is one more indication that streaming has peaked. Companies that once depended upon it, including AMC Networks (NYSE:AMX), are now conducting layoffs. (AMC Networks is not related to AMC Entertainment.)
What Happens Now?
One of my favorite movie memories from college is sitting through the credits at The Muppet Movie until a giant head of the Muppet Animal appeared on the screen and yelled “Go home,” literally breaking the spell.
This is the image that small AMC shareholders need now. Show’s over. Go home.
On the date of publication, Dana Blankenhorn held long positions in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at email@example.com, tweet him at @danablankenhorn, or subscribe to his Substack.
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