AMC Networks (NASDAQ:AMCX) Chairman James Dolan revealed plans to lay off about 20% of its workforce, according to the Wall Street Journal. The move can be attributed to falling demand for traditional cable television services, which is keeping the company’s bottom line under pressure.
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Based in New York, AMC Networks is an entertainment company, known for many popular TV shows, including “Mad Men”, “Breaking Bad,” and “The Walking Dead.”
The layoff announcement came shortly after AMC Networks announced the resignation of its CEO, Christina Spade. Spade had been in the position for only three months.
AMC Networks entered the streaming business by launching its own on-demand streaming platform, AMC+, in mid-2020. Yet, the company has been unable to generate enough revenue from streaming to make up for the tanking TV subscriptions.
Furthermore, the company’s advertising business has also been on the decline due to lower demand for advertising time on television. Falling revenue along with investments in growing the streaming business has taken a toll on AMC Networks’ financials.
Should You Buy or Sell AMCX Stock?
AMC Networks’ valuation looks lucrative. AMCX is currently trading at a price/earnings ratio of 3.1x, reflecting a 58.2% discount from its five-year average of 7.44. While the stock appears to be undervalued, AMC Networks’ declining revenues and uncertainty regarding success in the streaming business might keep investors on the sidelines.
On TipRanks, AMC Networks currently has a Moderate Sell consensus rating based on two Hold and three Sell recommendations. The average stock price target of $18 implies downside potential of 7.6%.
