Based on the disclaimer that you will read at the end of this article, the following words regarding AMC Entertainment (NYSE:AMC) may trigger concerns about my need to be institutionalized at a mental health facility. Please allow me some time to explain the unique situation I have, regarding my ownership of AMC stock.
While I’m not a stranger to utterly insane speculation — see my dumpster fire of a position in BlackBerry (NYSE:BB) as sad evidence — I acquired AMC stock before the idea of coordinated trading on Reddit was a thing. And that probably makes this narrative even worse, because I absorbed a huge percentage loss thanks to the novel coronavirus.
Fortunately, I didn’t absorb a hefty nominal loss, as AMC stock was one of my lower-confidence ideas at the time I purchased it. To be perfectly honest, I forgot about my equity ownership in the sense that I had personally accepted that shares would drop to zero because of the pandemic.
Later, when the Reddit army came to bolster the line for the beleaguered cineplex operator, I just watched the drama unfold. Because I had taken such a steep loss, my (temporary) profit on AMC stock wasn’t really much to write home about.
In hindsight, I recognize that I got way too greedy. I should have gotten out while I had the chance. Heck, getting out dead-even would have been ideal, again from the sobriety of hindsight. But a small profit? I had it made and I let it slip away.
I have two reasons to mention this. First, day trading is bad for your blood pressure. And in the heat of the moment, you tend to lose double-digit IQ points. Believe me, every point is valuable in this arena.
Second, having stepped away from the drama, I’m thinking clearly now. The reality is that it’s highly unlikely Reddit can outright save AMC, although social media warriors can provide entertainment and perhaps some profits.
From a purely selfish perspective, I want Reddit to do the impossible. While I’ve criticized the notion of spreading ad hominem attacks on short traders – it’s the intention, not the direction that matters – in the case of AMC stock, I think there are myriad valid reasons to save it.
Many of you first overcame the Catch-22 of the professional world – to get your foot in the door requires the experience of getting your foot in the door – thanks to AMC. Sure, you may not have enjoyed the crummy assignments you were ordered to perform. But you learned teamwork, customer service and the value of an honest buck among other skills.
With AMC and the movie theater industry gone, so too are these vital transitionary occupations.
Further, America is in many ways a “make believe” world. And most of that comes from Hollywood. I’m sorry but I don’t think the entertainment industry is the same without the box office. Streaming pales in comparison to the anticipation effect of a blockbuster film on the big screen.
Yet we’re facing a reality where streaming is the norm. According to a Healthline.com article, “It can take anywhere from 18 to 254 days for a person to form a new habit and an average of 66 days for a new behavior to become automatic.”
Folks, we’re on the cusp of 365 days since New York and California ordered unprecedented lockdown measures, which sparked similar actions across several state governments. Many of us, if not most of us have become psychologically accustomed to the new normal.
Presumably, we will need at least a year to reset our collective minds. And I don’t think it’s going to happen that quickly. Remember, it took more than two years following the Sep. 11 attack for air revenue passenger miles to recover to pre-9/11 levels.
Obviously, we weren’t all victims of terrorism at the time. But we are all genuinely victims of the coronavirus.
I wonder if hardcore sports fans ever place a wager against their favorite team ahead of a critical matchup. That way, if their team loses, at least they can console themselves with some money. But if the team wins, well, they’re hardcore fans, so they shouldn’t care about the monetary loss.
If I had to use an analogy of how I feel today about AMC stock, that would be it. I recognize there’s a very real possibility that shares could crater to zero. Streaming is gaining significant ground, and the gap may prove insurmountable.
I hope I’m wrong about that. But if not, I don’t think AMC has one year to survive subterranean revenues.
Now, I’m going to hold shares in case stuff happens. Should the Reddit army give it one last push, I’ll graciously take the offer.
But I’m an honest guy. If you’re thinking about AMC stock, I selfishly want you to buy it. At the same time, if you don’t, I’m not going to complain. This is one of the riskiest of all the high-risk, high-reward trades available.
On the date of publication, Josh Enomoto held a long position in AMC and BB.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.