Through the early stages of the Covid-19 pandemic, much speculation arose as to the future of movie theaters. With their consumer base stuck at home and HBO Max airing each season’s blockbusters, prospects seemed bleak at best. While stocks such as Netflix (NASDAQ:NFLX) surged, in-person entertainment venues remained shut down. Theaters have long since opened, but it hasn’t been a smooth road to recovery for AMC Entertainment (NYSE:AMC). The country’s largest theater company is still struggling to make the comeback that AMC stock fans are rooting for. However, they have had little cause for optimism — up until today.
What’s Happening With AMC Stock
The big news from AMC today is that the company is expanding even further. The company confirmed that it has reached lease agreements for two new theaters in San Diego, CA, and Washington, DC. The two venues will open in February and March. Both are high-traffic metro areas with a large theater-going market.
This news broke this morning before markets opened. Since then, AMC stock has been rising steadily. As of this writing, it is up 8.5% on the day and looks set to end the day on a high note. Today’s gains couldn’t push the stock into the green for the week, though. It is still down almost 2% for the past five days and almost 30% for the month.
Why It Matters
AMC stock’s decline over the past month is quite telling. Toward the end of 2021, shares surged when “Spider-Man: No Way Home” swung into theaters and swept the nation. And while the momentum generated by the film’s release lasted a while, ultimately it ran out, as all superficial market forces do. This theater company needed more than one blockbuster to save it, and it hasn’t gotten one.
Even AMC’s meme-stock status hasn’t been able to drive real growth for the company. Indeed, the all-time highs of summer 2021 are long gone. Even the expansion it announced today isn’t likely to drive any sustainable growth. Meme stocks in general had a difficult start to 2022, crashing late in the month. GameStop (NYSE:GME) has performed much better than AMC, though, with higher gains for the week and less of a decline for the month. This hints at the underlying truth — that there really is no reason to buy AMC stock, as InvestorPlace contributor Chris Lau recently speculated.
What It Means for AMC Stock
The party isn’t over for entertainment stocks, but it certainly is for AMC. Netflix is on track to rebound from its recent dip. Both it and Apple (NASDAQ:AAPL) recently picked up Oscar nominations for original content. When your saving grace is a superhero film, you need to find other ways to adapt and keep pace with a changing industry.
AMC stock is a clear case of what can happen when a meme stock sees any meaningful catalysts. And while the stock may still have a dedicated following, Wall Street is turning its attention to companies with ties to the metaverse and virtual reality spaces for entertainment plays. More theaters won’t solve the problem that AMC is facing. Just as there was no way home for Spider-Man, there likely isn’t one for AMC stock.
On the date of publication, Samuel O’Brient 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.
