'Worn-out' investors are contributing to AMC's stock slide, Stocktwits says

By James Rogers

Shares of movie-theater chain and original meme-stock darling AMC continued their slide Wednesday

Shares of AMC Entertainment Holdings Inc. have hit a series of record lows recently, a far cry from the heady days of 2021 that turned the movie-theater chain into a meme-stock phenomenon.

AMC shares (AMC) continued their slide Wednesday and extended their losing streak to six days. The stock ended the session down 2.5% at $4.11 for another record-low close. AMC shares also hit a new all-time intraday low of $4.01 Wednesday, according to Dow Jones Market Data, based on available data going back to Dec. 18, 2013.

The stock is down more than 98% from its all-time closing high of $339.05 on June 2, 2021.

Tom Bruni, lead writer of the Daily Rip & Markets newsletter at Stocktwits, a social platform for investors and traders, told MarketWatch that the precipitous decline in AMC's share price since mid-2021 has scared many retail and institutional investors out of the stock.

Related: AMC's stock continues its slide, hits record intraday low and another record-low close

"But since the stock's reverse split and APE share conversion last August," he said, referring to AMC preferred equity units, "bankruptcy has been taken off the table and allowed the company to focus on its core business selling movie tickets and concessions. Unfortunately for investors, that endeavor is struggling to gain traction."

AMC swung to a profit and reported positive net income for the second straight quarter in its third-quarter results in November. But investors are looking for more, according to Bruni.

"For now, the company remains focused on cutting costs and diversifying revenue streams with its AMC Stubs membership program and a Walmart-exclusive at-home popcorn deal, among other things," he said. "So far, those efforts have reduced losses significantly but have not driven consistent profitability, even with megahits like Barbie and Oppenheimer providing a significant tailwind this summer. Most investors are feeling worn out after many quarters of disappointment and remain concerned about further dilution."

The current losing streak is on pace to be AMC's longest since the one ending Aug. 29, 2023, when it fell for seven straight trading days. AMC shares are also down 11 of the past 12 days.

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However, Bruni noted there is a core community of AMC investors that will likely stick with the company for life. "Our platform shows low message activity and low participation, meaning it's the same (small) group of people discussing the stock right now," he told MarketWatch via email. "And even those in that community are struggling to remain confident, with our sentiment measure reading "extremely bearish" currently and for much of the last six months."

Shares of rival Cinemark Holdings Inc. (CNK) ended Wednesday's session up 1.4%, although the stock is down seven of the past 11 days.

Wedbush analyst Alicia Reese said that this is not the easiest period for the movie-theater industry. "There is a dearth of theatrical content in January and February due to production delays related to the recent SAG-AFTRA strikes, and fewer titles in 2024 than 2023, causing industry estimates to drop," she told MarketWatch via email.

"AMC is poorly positioned here relative to its peers given its high debt load and a significant amount of debt coming due in 2026," Reese said. The company is likely to continue to dilute its shares, even at low share prices, as it continues to repay its highest-interest debt and maintain enough cash on hand to work through soft quarters this year, according to the analyst. "That said, we think the theatrical environment should improve beginning in [the fourth quarter], and 2025 should be another strong year," Reese added.

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Three years ago, the movie-theater chain went from a beleaguered pandemic victim to a meme-stock phenomenon. Boosted by the WallStreetBets crowd on Reddit, AMC used a steep rise in its share price to tap into equity and debt markets, raising $917 million in January 2021.

Since then, AMC has taken aim at its debt burden, which was more than $5 billion in 2022. That year, the company launched its AMC preferred equity unit special dividend, and in 2023 it completed the conversion of the APEs into AMC common stock, along with a reverse 1-for-10 split of common stock.

In December, AMC completed its latest at-the-market equity offering, raising approximately $350 million.

AMC shares are down 91.8% in the last 52 weeks, while the S&P 500 SPX has gained 20.6%.

-James Rogers

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01-17-24 1626ET

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