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Why Did AMC Stock Gain 15% This Week?

AMC (NYSE:AMC) is continuing a meteoric year far longer than anyone had expected, and none more so than institutional short sellers. Retail investors were able to get AMC stock off of life support and helped rehabilitate it into a viable — if controversial — entertainment play. Now, the company is flexing its new muscles and drawing enthusiasm from the market to close out a solid week.

Image of the entrance of an AMC Entertainment (AMC) branded theater. undervalued stocks
Source: Helen89 / Shutterstock.com

What Happened With AMC Stock

The week began for the company with a big bang. The theater chain set a new Labor Day weekend revenue record, a feat not accomplished since 2013. CEO Adam Aron took to Twitter to break the news on Tuesday, which was met with great optimism by the company’s rabid fanbase of investors, called the Apes. The executive noted that the weekend coincided with the box office debut of Marvel Studios’ “Shang-Chi” and said the new record has the film’s $75.5 million-grossing opening weekend to thank for the company milestone.

Yesterday saw the company’s momentum continuing to build as it unveiled a $25 million marketing campaign. Nicole Kidman will become the face of the company’s campaign as she stars in a new commercial. Aron says the ads are meant to show what an “incredibly special” experience it is to watch a movie at one of the company’s many theaters.

Why It Matters

The company’s big week is a huge indicator of the company’s recovering health. AMC still carries a hefty debt on its balance sheet, but it’s making some smart moves. The company’s offensive push with the ad campaign is a savvy way to incentivize ticket sales. And it’s obvious with Kidman’s role in the commercial that Hollywood is backing the theater industry; streaming may be convenient, but actors still hold deep reverence for the brick-and-mortar cinema.

The revenue record speaks for itself as well. The delta variant of the coronavirus continues to threaten further economic woes. However, the chain is performing better than it has in years. The milestone is a bullish indicator for the retail investing crowds that the investment isn’t a one-and-done short squeeze. As FXEmpire notes, Adam Aron is keenly aware of how the stock’s investor base has flipped from being institutionally owned to being individually owned. He wants to make good on grandiose promises of a business turnaround made at the beginning of the year.

What Comes Next for AMC Entertainment?

AMC’s earnings report came at the beginning of August. Through that, Adam Aron and company are making some hefty promises to shareholders. Most notably, the executive says AMC will begin accepting Bitcoin (CCC:BTC-USD) at its theaters before the end of the year. Investors should definitely be anticipating some form of information on that in the coming months.

Beyond that blockbuster of an unveiling, Aron is also teasing bringing live sports to its theaters for the ultimate cinematic viewing experience. Further announcements include in-theater concert experiences and a potential collaboration with Gamestop (NYSE:GME).

All the while, short interest in AMC is continuing; according to Fintel, the short volume ratio of AMC stock rests at a hefty 57.57. Nearly 29 million shares of AMC are short from the 50.2-million-share float of stock. Expect the highly devoted AMC fanbase to continue loading up on the dips. They will continue to propel the stock upward going into the fall.

Today, those investors are helping to send AMC upward to the tune of about 6%. Going into the afternoon, 63 million shares are trading hands against a daily average volume of 112 million.

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.


Article printed from InvestorPlace Media, https://investorplace.com/2021/09/why-did-amc-stock-gain-15-this-week/.

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