The world’s largest cinema chain operator, AMC Entertainment Holdings Inc (NYSE: AMC), saw shares fall 6.7%.
The fall came on the back of news that it was selling several movie theatres in the Baltics, for a fee of US$77 million, in order to help improve its liquidity.
It’s a name that’s been synonymous with good times for most of us but investors in AMC Entertainment must feel like they’re sitting through a horror movie the way its stock price has played out.
I don’t expect it to get any less bloody from here for AMC. The share price is still down by over 25% from where it started in 2020.
Its shares are likely going to be a bellwether for how the Covid-19 pandemic plays out but beyond that, investors should think about the future of cinema with the slew of at-home offerings consumers have been getting.
Disney+ has already launched in the US and several European countries and is set to be in Asia by the first quarter of next year.
Then you’ve got Netflix’s massive range of content, where the thought of not doing a theatrical release for a movie is now much less of a complete no-no than it once was.
Add in AMC’s huge debt burden (in the billions of dollars) to the above and you’ve got the makings for a highly volatile, and unpredictable, stock price.
The chain’s eye-watering 99% year-on-year drop in revenue in the second quarter may recover in the quarters ahead. To what extent, though, is anyone’s guess.
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Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.