AMC Entertainment Holdings (AMC), Reddit’s favorite movie theatre chain, seems to have shrugged off the sell-off of its unprecedented $72 peak. WallStreetBets retail investors still seem as fond as ever of the name, with the stock up over 730% in the past 12 months.
Management has capitalized on the resurgence of its stock, using its funds on efforts that could help it get ticket sales rising again, in spite of the latest rise of Delta variant cases across various parts of the United States.
Despite recent initiatives and potential reopening momentum that could be in the cards for 2022, I can’t get behind AMC stock at these heights. So, for now, I am neutral on the name. (See AMC stock charts on TipRanks)
AMC Makes Use of Its Funds
Earlier this month, AMC launched its $25-million ad campaign featuring actress Nicole Kidman. It’s a bit out of the ordinary to see a movie theatre company have an ad. Still, if AMC has the funds, it may as well put it to use on marketing initiatives.
Indoor restrictions could go on and off for some unforeseen amount of time. Unfortunately, another variant (perhaps Mu) could drive the wave after Delta has exhausted itself. No amount of marketing or advertising spend could allow AMC to avoid the impact of any future COVID-19 waves.
In fact many avid pre-pandemic moviegoers are likely on the fence about returning to the silver screen, even in states that lack significant restrictions.
Undoubtedly, these fence-sitters would be enticed by AMC’s intriguing new ad. Video streaming has really taken a bite out of AMC’s slice of the pie, even before the coronavirus recession. So, should the ads pay off, they don’t just have Nicole Kidman to thank. They also have WallStreetBets’ AMC shareholders, which probably deserve more complimentary popcorn for their ability to hold through recent volatility.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, AMC stock comes in as a Hold. Out of four analyst ratings, there are three Holds and one Sell.
The average AMC price target is $11.75. Analyst price targets range from a high of $16 per share, to a low of $7.50 per share.
Bottom Line
There are meaningful catalysts on the horizon for AMC. Recent ad spending and a hot movie slate, with The Matrix Resurrections and No Time to Die coming soon, could propel AMC stock towards its peak.
That said, it is unknown as to when WallStreetBets investors will decide to move on, or if any blockbuster quarter can give a lift to the stock after its phenomenal past-year run.
Disclosure: Joey Frenette doesn’t own shares of any mentioned companies at the time of publication.
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