What Happened?
Shares of theater company AMC Entertainment (NYSE: AMC) fell 3.4% in the afternoon session after concerns about its recent financial performance and the general volatility associated with its status as a 'meme stock'. Investors appeared to focus on the company's last quarterly report, which showed a 9.3% decline in revenue compared to the previous year. While the reported loss per share was slightly better than what analysts expected, the falling revenue pointed to underlying business challenges. The stock's movement also occurred within the context of broader market discussions about 'meme stocks,' a term for shares that gained popularity among retail investors online. These stocks often experienced significant price swings based on sentiment rather than just fundamental business performance, adding a layer of speculative risk for investors.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy AMC Entertainment? Access our full analysis report here, it’s free.
What Is The Market Telling Us
AMC Entertainment’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 3.2% after analyst upgrades and a strong summer box office performance fueled investor optimism. The positive sentiment was driven by multiple Wall Street analysts upgrading the stock. Wedbush analyst Michael Pachter upgraded AMC from neutral to outperform and raised his price target, citing a more consistent upcoming film release schedule. Benchmark analyst Mike Hickey also increased his earnings forecast for the theater chain, noting the potential for "outsized potential upside." This optimism was supported by a recovering box office, with total domestic revenue up 15% year-over-year. Analysts projected AMC's domestic ticket sales to jump significantly in the second quarter.
AMC Entertainment is down 22.4% since the beginning of the year, and at $3.13 per share, it is trading 41.1% below its 52-week high of $5.31 from July 2024. Investors who bought $1,000 worth of AMC Entertainment’s shares 5 years ago would now be looking at an investment worth $85.20.
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