After yesterdays massive gains to the tune of 50% AMC stock pre-market looks ready to explode again. The short squeeze continues!
Even with this weeks massive gains the stock still hasn't fully returned to it's glory days all time high, but's it's almost there.
Yesterday was a massive day for the AMC stonks and pre-market it looks ready to pop again.
AMC shares popped as much as 50% Thursday afternoon to $29.44, eclipsing a closing high of $19.90 on January 27—the day meme stocks peaked earlier this year, before crashing as much as 90%. -https://www.forbes.com/
AMC share prices have now eclipsed the previous meme highs and have actually blown way past it! As I write this the markets have opened and the prices has surged to $35 and change.
I can't say how much of these gains can be sustained, only time will tell, but I would bet that AMC and theatre operators in general are on verge of a boom. It might not happen next month but North Americans haven't been to the movies in ages and there's going to be demand for entertainment as North America's economies continue to re-open.
Impending Entertainment Boom
I don't know about you and I can't speak for everyone but I enjoy a night out to the movies once in a while and I think we all have friends somewhere that regularly frequent the cinemas.
When was the last time you saw a movie in theatre?
For me it was either John Wick Chapter 3 or Pet Cemetery, but ether way it was 2019. Even if theatres opened today I'm not sure there's the supply to draw the crowds needed to be profitable but eventually movie production will ramp up and I would totally expect a flood of movies if not in time for Christmas this year early 2022.
Regardless retail investors seem hell bent and determined to see AMC share prices pushed to new ATH's which might have actually just literally happened as this mornings high so far was recorded as 36.76.
Can AMC Return To Profitability?
The industry was absolutely obliterated by the pandemic and is now dependant on a return to normal and it's still not a guarantee that even with restriction lifted that the same volume of movie goers will actually be comfortable returning to theatres in the same numbers as before.
To get back to its glory days, AMC's game plan is to focus on harnessing film exclusivity in its theaters, reducing its debt load, and emphasizing high-margin alternative channels, such as its video on demand service. AMC also needs the pandemic to wrap up in 2021, at least in the United States. The quicker its theaters can return to full capacity, the faster the company can address its most-pressing concerns. -https://www.fool.com/
Apparently sales are expected to double in 2021 but AMC was forced to take on close to $6B in debt in 2020 in order to stay alive. Not to mention they're apparently paying greater than 10% interest to service that debt.
Wall street predictions indicate that it will be at least another 4 years or so before AMC can return to profitability, until the loses are expected to continue to pile up quarter after quarter and year after year. Things aren't looking good.
To be saved would require a massive return to the theatres across North America, with a good enough supply of movies to draw the crowds, some marketing to instill confidence around the safety of being in a theatre, and to survive long enough to edge closer to profitability. Who knows, anything is possible.
Ciao for now,
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