The last month has been pretty rough on AMC Entertainment (NYSE:AMC). The theater chain erased a great deal of its gains over the last few weeks, thanks to slowing momentum in the world of meme stocks. Investors in this highly volatile investing sect have seemingly turned their attention away from large plays like AMC and sent prices tumbling. But now, the company is closing a deal that can bring it some crucial revenue over the next few years; two theaters in the Los Angeles area will become AMC theaters, with the chain signing a years-long lease on the locations. As a result, AMC stock is gaining once again.
Investors are jumping for joy with some long-awaited good news. AMC is inking a long-term lease to operate two historically high-grossing theaters in the Los Angeles area; the company is revealing the locations to be the theater at the Grove shopping complex and another at Americana at Brand. These theaters are the second-highest grossing and fifth-highest grossing cinemas in the LA metro area, respectively. Of course, in the movie capital of the world, as well as a metro area of nearly 19 million people, AMC can expect these locations to pull plenty of revenue. Previously, the theaters were both operated by Pacific Theatres.
New AMC Theaters a Good Omen for AMC Stock
The news is evidence that the tides really are changing for the better for AMC stock. As InvestorPlace’s Chris MacDonald points out, retail traders appear to be tired of the marathon holding required to keep the stock up. A selloff, combined with what seems to be naked short selling, are letting air out of the stock’s tires.
Announcement of these new AMC theaters is generating green candles for what seems like the first time in ages. The stock is up over 12% on the day, undoing some of the speedy and steep losses of the last five days. Trading volume is looking like it will miss the daily average, though, with 116 million shares trading hands so far today.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.