Why AMC Entertainment Stock Was Falling Today
What happened
Shares of AMC Entertainment Holdings (NYSE:AMC) were cooling off today as domestic box office receipts declined this weekend from the prior one and as ticket sales for Walt Disney’s (NYSE:DIS) Black Widow tumbled in its second weekend in theaters, which could show the impact of the Marvel movie’s simultaneous release on Disney+. In fact, the movie theater industry lobbying group took a swipe at the strategy.
As a result, AMC stock was down 9.8% as of 10:11 a.m. EDT.
So what
Total domestic box office receipts came in at $92.7 million with Space Jam: A New Legacy topping the list with $31.7 million in sales. That was down 22% from the previous weekend when Black Widow topped the list, and still substantially below pre-pandemic levels in 2019 when box office weekend sales averaged close to $200 million through July.
Additionally, Black Widow sales fell sharply from the first weekend, down 67% to $26.3 million, the worst ever second-weekend drop for a Marvel Comics Universe title.
In a press release, the National Association of Theatre Owners also slammed Disney’s “day-and-date” release strategy, saying that Disney+’s Premier Access, which allowed subscribers to pay $30 to watch Black Widow, is not newfound money, “but was pulled forward from a more traditional [premium video on demand] window, which is no longer an option.”
Now what
The debate over Hollywood’s windowing policy, or the amount of time theaters get exclusivity, will endure, and it’s unclear what Disney’s long-term strategy will be, as it’s called the simultaneous releases a COVID-19 experiment.
However, movie theaters are lagging behind other entertainment options like restaurants and travel in their recovery, and the ability to watch blockbusters like Black Widow at home clearly poses a challenge for AMC and its peers.
Considering the entertainment stock is already grossly overvalued, it’s not surprising to see a pullback today.
AMC Share Price: Price falls again as AMC reverses back into bearish downtrend
Unlike AMC, GameStop (NYSE:GME) unexpectedly continued its winning streak from Thursday as the original lead meme stock added 1.34% to close the trading session at $169.04 . Elsewhere, other meme stocks continued to decline as ContextLogic (NASDAQ:WISH) tumbled 8.13% on Friday, as the stock has now lost nearly 20% of its value this week alone. To say the short squeeze attempt by Reddit has fizzled out is an understatement, and as much as these stocks are mentioned on social media, it’s clear that they have officially lost all momentum.
Traditionally, the summer blockbuster season has been the most profitable time of year for movie theaters, but even strong premieres from Black Widow and F9 couldn’t salvage AMC’s stock . While there are some much anticipated titles coming down the pipe, investors may finally be realizing that even with record sales numbers, AMC’s current valuation is difficult to justify, especially for a company that carries as much debt as it does.
NYSE:AMC briefly gave hope to the Reddit Apes on Thursday when the stock bucked an extended downward trend by gaining 7.72% during the session. On Friday, shares of AMC were back in the red after falling 2.89% to close the week at $34.96 . There was much optimism following Thursday’s performance, especially when the stock surged a further 6% in after hours trading on no real news from the company. At this point it’s clear that AMC’s stock is in free fall and once again, plenty of retail investors will be left holding the bag.
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AMC Stock Could Still Be Worth $73 Next Year if FCF Turns Positive
AMC Stock Could Still Be Worth $73 Next Year if FCF Turns Positive