I don’t like being the guy who says, “I told you so” when it comes to stocks that have suffered catastrophic losses. No one wants to hear it and the longs are already frustrated enough. In this case, I’m talking about AMC Entertainment (NYSE:AMC) stock is down more than 75% from its high.

Worse, the stock is working on its fifth consecutive decline. It’s been an ugly ride once the fun and games were over amid the Reddit-fueled short squeeze failed to put this one on the moon.

Don’t Be Smug, But Learn a Lesson

I don’t like being the I-told-you-so guy because, well, I’ve suffered big losses before too. It sucks and you feel gutted. When I look around at the stock market, I see many stocks that suffered massive losses that don’t deserve them. 

Look at Roku (NASDAQ:ROKU), (which I do have a position in, along with a very sobering and smirk-removing loss). 

However, the stock is below its pre-Covid highs, has a reasonable valuation and is completely dominating streaming video. Despite that, it’s down 69% from the highs, eclipsing the percentage peak-to-trough loss it suffered during the coronavirus correction.

Now look at AMC Entertainment. 

What was its main catalyst? A short squeeze – that was it, essentially. 

Sure, movie theaters were opening back up in limited capacities with limited big hits coming to theaters. And fine, CEO Adam Aron was playing with ideas like cryptocurrencies and partnerships with GameStop (NYSE:GME).

But nothing justified the run from sub-$10 to north of $70. Hell, it didn’t deserve to go north of $30, yet that didn’t stop AMC stock. 

More than once, its egregious valuation has been pointed out. The current situation didn’t justify its valuation – which was far in excess of what it had ever garnered – and its future growth projections didn’t justify it either. 

The lesson here is, it’s one thing to buy high-quality companies and another thing to buy stocks to make a quick buck. Sure, Roku has been crushed. But in five years, I expect the stock to be booming. 

As for AMC stock? I can’t say the same thing because most traders were buying it for a quick buck and short-term catalysts, not because of a solid secular investment thesis.

Trading AMC Stock

The trigger was $33.75.

Once that mark failed to hold, AMC stock was in trouble. Shares fell hard down toward $25, where it found a lift from the weekly VWAP measure. However, bulls had one more chance to get out while the getting was good, as shares retested the $33.75 level and were rejected. 

When stock breaks a key level and then goes back to it, consider that a second opportunity to get rid of it. Since then, we’ve seen the stock fall about 50%. 

Amid the fall, we’ve seen the monthly VWAP measure fail as support, as well as the $20 area. That was a major downside target of mine if AMC stock were to break down. Below it now, keep a close eye on the $15 to $15.50 area. 

That’s where the 200-week and the 50-month moving averages come into play. If we don’t get a bounce, then $10 could certainly be in the cards. Keep in mind, at the stock’s peak, $35 was major resistance. 

I don’t necessarily think $2 should be back on the table, but $35 shouldn’t necessarily be. It’s likely somewhere in between, but I don’t know where.

That’s fine though, because it’s one thing to identify a stock as a trade and trade it during optimal environments. That does not make it an investment when things go south – it makes it a no-touch, which is exactly what AMC stock is to me right now.

The Bottom Line on AMC Entertainment

Again, I’m not trying to kick the downed bulls. I don’t want to be kicked, either. But this wasn’t a great company even before the pandemic hit. 

Analysts expect $2.46 billion in sales in FY 2021. While that would be almost double 2020 sales, that’s less than half of the revenue it booked in 2019. In 2022, estimates call for revenue of $4.61 billion – still well shy of $5.47 billion AMC had in 2019. 

I’m not trying to throw around a bunch of random revenue figures. But unlike Roku, which is doing far better business versus pre-pandemic, AMC is not even back to its pre-pandemic days, when it had relatively anemic revenue growth. 

My point is more that AMC still isn’t back to pre-pandemic operation levels, doesn’t look like it will be this year and isn’t profitable. While it went through a lot of short-squeeze hoopla, the business simply isn’t able to justify the stock’s valuation. 

It’s not a hill I’m willing to die on, but the numbers don’t lie and that’s what will keep me out of this one. 

On the date of publication, Bret Kenwell held a long position in ROKU. The opinions  expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.