AMC stock price – What Influences it the most
What is the AMC stock?
AMC Entertainment Holdings, Inc. is an American movie theatre chain headquartered in Leawood, Kansas. Founded in 1920, AMC Entertainment Inc. is the world’s largest chain of movie theatres. The company went public on December 18, 2013, but its stocks didn’t grab public interest until 2021.
AMC stock is a class A common stock, just like most shares issued by other public companies. The AMC stock provides ownership interest in the company. It gives owners a portion of the profits earned and voting rights that can be exercised during the annual meeting via the internet.
At the start of 2021, AMC’s stock price was $2. In the next six months, it increased in value by more than 30 times, doing a record close of $62.55 on June 2, 2021. In 2022, the AMC stock peaked at around $24; at the same year’s end, the stocks were down to $4.07.
What drove the initial price surge was an online initiative by the Wall Street Bets subreddit to invest in dying companies that were on the verge of bankruptcy. But why would the biggest movie theatre chain in the world be on that list?
Business Model of AMC Entertainment Holdings Inc.
The truth is that the movie industry has changed dramatically over the past decade. People went from seeing movies at the cinema to simply watching them online, and it all has to do with streaming services. Netflix, Hulu, and many other streaming platforms proved to be competitors to AMC.
AMC Entertainment was struggling even before the start of the 2020 pandemic. Once the lockdowns hit the world, visiting the cinema was out of the question for most people worldwide. This strengthened the position of streaming services even further.
As of January 28, the company’s Institutional Shareholder Services Governance Quality Score stands at 8. This score is formed by four different factors
- Audit: 7
- Board: 9
- Shareholder Rights: 6
- Compensation: 9
A score of 1 indicates low governance risk, while a 10 means high risk. With AMC Entertainment getting an 8, governance is not the company’s strong side.
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Why is the stock price of AMC Entertainment Inc important?
The AMC stock was spotlighted in 2021, thanks to an internet initiative to buy “meme stocks”. In 2023, the AMC stock is down over 85% from its all-time high of $62.55. Before the global pandemic, the company’s market capitalization in 2019 was $5.5 billion. Once the lockdowns began, AMC’s market cap dropped to $1.2 billion. At the time of writing, the company has a market capitalization of $2.64 billion and remains highly volatile.
What makes AMC stock so important is that it can serve as a barometer for the potential return of another “meme stocks” wave. At the end of 2021, AMC’s market cap was nearly $14 billion, so there’s plenty of room for growth. If another similar run happens, that is.
What factors affect the AMC stock price?
The AMC stock price was primarily affected by the global pandemic and lockdowns. With restrictions on most public activities, movie theatres were no exception. Many people think that tickets are the primary source of revenue for a giant such as AMC, but the reality is quite different.
While tickets make up a significant portion of the company’s revenue, concession sales are much more profitable. Food and beverage sales have earned AMC hundreds of millions each quarter of 2022. The important detail is that tickets and concession sales rely on people returning to the big screen at the cinema instead of enjoying streaming services at home.
AMC’s upper management seems to be quite aware of its revenue streams, which is why it is no surprise that the company has decided to expand to new horizons and diversify. In March 2022, AMC bought a 22% stake in Hycroft Mining, a precious metals mining company in Nevada that has been performing relatively well. In addition, back in 2022, AMC CEO Adam Aron mentioned that an AMC delivery service similar to Uber is not out of the question. It’s already 2023 and there’s still no AMC delivery but if it comes to fruition, this can be a severe catalyst to the AMC stock price.
How to trade on AMC stock derivatives?
Trading AMC stock isn’t any different than any other publicly traded shares. First, you’ll have to select a broker that operates on the New York Stock Exchange since that’s where AMC is mainly traded. Once you’ve found a broker that suits your needs, you can open an account and fund it with a credit/debit card or a bank transfer.
After you’ve funded the account, all that is left is to buy the stock or any derivatives. AMC Entertainment is the biggest movie theatre company in the world and liquidity is not a problem. AMC stock derivatives, such as options and derivatives, are all available on the NYSE.
AMC is one stock that you should keep in mind throughout 2023. While the chances for recovery to its 2021 levels are quite low, there’s always the possibility for another “meme stock” wave. Furthermore, AMC Entertainment is still the biggest movie theatre chain and as the world returns to normal after the pandemic, people might prefer going to the cinema again. This possibility, paired with the company diversifying its revenue streams, makes AMC a must-have on your watchlist.
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