AMC stock has been struggling ever since. Shares fell by a further 7% in Friday morning trade to 6.62, the lowest level since February 23, 2021.
In 2022, the drama is still going on. On August 22, shares fell, causing a brief suspension of trade owing to market circuit-breaker news. AMC (NYSE:AMC) dropped as much as 42% to a session low of 10.46 and deviated from the 50-day moving average, indicating stock weakness. Preferred stock units of the corporation made their NYSE debut under the ticker APE.
Every class A common share of AMC that a holder had on August 15 was exchanged for one APE. Investors were informed by AMC management that the so-called “APE-split” would affect AMC shares. However, shares have kept declining.
AMC stock (NYSE:AMC) has already seen a significant decline since late November as a result of failing in an effort to retake the north side of the crucial 10-week moving average. Additionally, shares completely erased their profits from the quick but significant surge that occurred from a buy mark of 14.64 delivered in May to early June of 2021.
Since bottoming out at 10, which is maybe a crucial psychological price level, AMC stock has been on the run since May of this year. And in August, shares bullishly moved across the long-term 200-day moving average for almost two weeks.
In other words, up until the most recent decline, AMC’s short-term action had been at its most positive point since late August or early September of 2021.
Is it time to take any leftover gains off the table at this point? After all, the rally in May 2021 showed signs of a climactic run.
Is it a buy-now, or what?
In order to establish if the Leawood, Kansas, corporation with 950 theaters and 10,600 screens has a strong chance of generating additional revenue for stock traders, this report looks at fundamental, technical, and fund ownership variables.
Early in February, AMC reported fourth-quarter sales of $1.17 billion, up 620% from the previous year’s period, and an adjusted net loss of 11 cents per share. The top line exceeded the $1.09 billion average expectation from Yahoo Finance, but the net loss came in at 26 cents. The mega-hit “Spider-Man: No Way Home” significantly increased ticket sales. According to AMC management, bookings for the upcoming movie “The Batman” were “extremely robust” in their first weekend.
In March, purchasers once more controlled the stock for a number of weeks. AMC hit 34.33, a four-month high. AMC stock, however, brushed up against the 200-day moving average on a daily chart, as seen by a MarketSmith chart.
In August, AMC recovered more successfully. It ended up closing a few days above the 200-day mark. Since November, that has not occurred.
AMC released yet another set of improved quarterly statistics on August 5.
In comparison to the same time last year, the company’s net loss decreased to 20 cents per share. Compared to the same quarter last year, AMC’s net loss decreased to $121.6 million from $344 million. To $1.17 billion, sales increased by 162%. That was the seventh consecutive quarter of triple-digit top-line growth.
Additionally, the business had a $52 million positive operational cash flow on a non-GAAP basis. At an operating level, it spent $127 million of cash the year before. The company also disclosed $1.18 billion in liquid assets.
According to a news release from the CEO, Adam Aron, “our Q2 2022 results… illustrate once again what we have long stated, that as Hollywood develops pictures with wide consumer appeal, people will rush to watch them at movie theaters in massive and eye-popping numbers.” AMC theaters drew 59 million moviegoers in total, a 168% increase over the previous year.
More Than Just the Box Office?
Remember that box office successes don’t always translate into a significant profit for theater owners.
The surplus cash from ticket sales for blockbuster movies flows disproportionately to Hollywood distributors, according to Robert Marich, author of “Marketing to Moviegoers,” who told IBD that “theatre share of ticket revenue declines on a percentage basis.”
AMC (NYSE:AMC) is eager to diversify its sources of income.
CEO Adam Aron stated six months ago that the firm anticipates launching an AMC-branded credit card later this year, as well as a meal delivery service with Uber as a partner as early as the second quarter. Shiba Inu Dogecoin payment acceptance was also announced by AMC.
Another exceptional event involving AMC made news in April when it acquired a 22% interest in Hycroft Mining (HYMC). This company runs a precious metals mine in Nevada. AMC receives 23.4 million shares in the firm, each of which has the warrant to purchase further shares. According to reports, the 71,000-acre mine has 600 million ounces of silver that is suitable for mining and 15 million ounces of gold. After increasing by 511% in just one week of March, HYMC has slowed down.
AMC stock continued to draw short sellers during the summer of 2021, even after an extraordinary short squeeze rally went into overdrive in January of that year. Have the shorts abated now that they have suffered a painful downturn since the spring of 2021?
For the week ending August 12, data from the brokerage TradeZero reveals that short sales increased to 7,369 shares at an average price of $24.69. 3,087 shares were sold short by TradeZero customers for the week ending August 19 at an average price of 21.52. When compared to the previous year, that is mild, according to TradeZero. AMC Entertainment ranked third among companies trading at least $10 per share and experiencing the highest short sales for the week ending July 23, 2021. 14,666 short-sale transactions totaling $3.8 per share were completed on the broker’s platform.
AMC (NYSE:AMC) did not rank among TradeZero’s top 10 highly sold-short companies with share prices under 10 for the week ending September 16.
Check out the 50-day moving average shown in red on all IBD charts. AMC stock traded primarily above this important technical level for six weeks before the devastating drop in late August. The 50-day line started to rise once again in the interim. But that’s not the case now.
How important is a rising 50-day line? That indicates that up until the second part of August, AMC’s price trend had been upward over the previous 2-1/2 months. However, the 50-day price trend has unmistakably shifted downward.
Are Short Positions In AMC Stock Covered?
Let’s return to the last ultra-rapid run from the 2021 meme stock boom.
AMC destroyed the short sellers by surging as high as 203% before the significant rise on June 2, 2021, which occurred during just five trading sessions (May 24 to 28). AMC stock closed the week of June 4 with a 100% or higher gain for a second straight week. Incredible.
WallStreetBets chat-room traders on Reddit bought AMC stock shares and bullish call options at the same time in January 2021. They carried out the same actions in a number of other distressed businesses that had been extensively sold short.
You can almost always expect a purchasing frenzy to start when a company has a significant amount of short interest and is bought up. Why? Short sellers frequently have to reverse their positions after betting on a decrease in the stock. They repurchase shares to close off their short position.
MarketSmith estimates that the number of shares sold short by retail and institutional investors currently exceeds the daily average volume of 42.8 million AMC stock by 2.3 times. 98 million shares altogether. Short interest, then, comprises 19% of the stock’s total float of 511.7 million shares, up recently but still down from 21% in the spring of 2021.
High profitability may encourage institutional investors and huge funds to accumulate more assets. A strong bounce may encourage short sellers to close out their holdings, which would drive higher shares.
Twice every month, the NYSE releases statistics on short-selling positions. Additionally, abrupt fluctuations in daily share turnover may distort the short coverage ratio. Also not taken into account in the statistics above are any shares that could have been traded short in dark pools.
Featured Image- Megapixl @ Clewisleake
Author Valerie Remorosa