AMC stock has dropped 7% over the past month, and investors should be concerned about what it means for the future of this struggling company. In the fourth quarter, AMC’s CEO Adam Aron sold $9.65 million in shares, excluding 2.9 million shares that are tied to performance targets. But it’s not the first time AMC stock has plummeted. The company is still in the process of restructuring itself.
The company’s domestic box office has been a disaster. Its profits fell from $1 billion in 2010 to $1 billion in 2020, but it is on pace to make $4 billion in sales this year. Despite the negative news, AMC is trading at its highest valuation in years. Other companies in the video-game industry are also underperforming, but their technicals have been improving in recent weeks. GameStop has fallen below a key horizontal support level of $150. Last week, it was downgraded from its 50-day and 200-day moving averages, and it is nearing a “death cross” technical indicator.
In December, AMC announced the acquisition of two theaters in Los Angeles and San Francisco.
The company plans to rebrand those venues in spring. While blockbuster movies may bring in big profits, they are not always the best choice for theater operators. In fact, the fourth quarter was disappointing for the company. Therefore, the stock has retreated and is now in a base-building phase. Despite this, AMC’s stock has rallied in recent weeks.
On Friday, AMC’s stock soared more than 10%, led by a tweet from its CEO. In the wake of GameStop’s big quarterly loss, AMC executives announced large stake sales. While these developments have spooked investors, the stocks have remained flat over the past four weeks. As of late June, AMC options have declined by 40%. The short interest in AMC is now at a high of almost $27 per share, and will likely be much lower at the end of the month.
The company’s shares are at an all-time high, despite the fact that they’ve fallen by more than 15% since the start of the year. On the other hand, AMC’s stock has traded around the mid-$15 level for the past three months. The shares’ price-to-earning ratio is now a bit higher than GameStop’s, and that’s a great sign for the company.
AMC stock is falling today after new California rules forced AMC to close theaters in key areas.
AMC has taken advantage of these changes to reopen theaters in these areas. Century City and Burbank, for example, are now open for limited audiences, and the company aims to have all of its locations open by the end of the week. However, it’s still hard to say if these changes will help the company’s stock.
While AMC stock isn’t as volatile as some other stocks, it has also been the subject of a number of recent events. AMC’s lackluster earnings report last week was largely due to a higher-than-expected loss, and a subpoena from the SEC. On the other hand, AMC stock has been impacted by insider sales by its CEO and the rejection of an NFT dividend by the board. In the long run, both stocks have risen more than six hundred percent.
Despite a negative beta, this stock has been able to rally for two consecutive weeks,
May 24 to 28. This week, AMC stock has nearly doubled in value compared to the previous week. Similarly, WallStreetBets, a popular meme stock Mecca, reported that mentions of AMC and GME tickers were mostly static until an hour after the price momentum. But after that, mentions spiked exponentially. It seems that both AMC and GameStop were buying at the same time.
AMC stock traded up more than 203% in five sessions of trade from May 24 to May 28. And it almost finished the week at 100% for a second consecutive week. Traders in WallStreetBets chat room purchased AMC stock in January 2021 and AMC call options in January 2021, predicting that the stock could hit a new high in January 2020. Its emergence from a trough in a major market trend suggests that the company is being manipulated by investors in a coordinated way.