It isn’t just Twitter (NYSE:TWTR) and Reddit users that are are noticing AMC Entertainment (NYSE:AMC) right now. Today, the movie-theater chain is also drawing attention from TIME, which named it on a list of 2022’s 100 most influential companies. The magazine cites AMC’s “meme-stock mastery.” Currently, AMC stock is down, but this new ranking has generated considerable momentum across social media.
The buzz surrounding AMC this morning is strong. However, it hasn’t pushed the stock up. Despite an initial rise when markets opened, AMC stock reversed direction within the first hour. As of this writing, it is down more than 6% for the day and isn’t showing signs of a rebound.
That said, through it all, many retail investors are still doubling down on the stock and calling for bullish plays. The TIME ranking may not be enough to push shares back into the green, but it has certainly ignited plenty of enthusiasm.
What’s Happening with AMC Stock?
Yesterday evening, AMC CEO Adam Aron tweeted that the company had been named to TIME’s exclusive list. “You all can be proud,” the executive told followers. Clearly, many retail investors are.
You all can be proud that Time Magazine today named AMC Entertainment as one of the “100 Most Influential Companies of 2022” globally. We join with Alphabet (Google), Amazon, Apple, Disney, Meta (Faceboook), Microsoft, Moderna, Pfizer, Reddit and Walmart among other great firms. pic.twitter.com/lWXvaGofJ6
— Adam Aron (@CEOAdam) March 31, 2022
Along with the ranking, TIME noted AMC’s rise to prominence amid the economic uncertainty spurred by Covid-19. The article says the following:
“Internet-savvy investors last year turned the company into a ‘meme stock,’ making it popular despite shaky fundamentals. By gobbling up shares, those traders boosted AMC’s price, squeezing traditional investors betting against the firm.”
This description sums up AMC’s journey from struggling theater chain to market sensation quite well. However, it also touches on another important aspect; the stock’s surge in popularity was driven by the same contrarian investing mentality that propelled GameStop (NYSE:GME) to historic heights. AMC stock became popular because investors took interest, not because any company-specific catalysts.
By this logic, AMC is certainly an influential company. It helped change the face of investing, carving out a niche as one of the market’s most important meme stocks. Investors should be careful, though. That doesn’t necessarily mean it’s a good buy.
Recently, AMC purchased a 22% stake in Hycroft Mining Holding Corporation (NASDAQ:HYMC). Although the mining company has performed well since that purchase, AMC has not. As InvestorPlace contributor Alex Sirois says of AMC, “It wasn’t a worthwhile investment before, and it isn’t a worthwhile investment now.”
What It Means
There is an important lesson for investors when it comes to AMC stock. A company can be influential in shaping market trends, but that doesn’t mean it’s a worthwhile investment. Since the first meme stock rise, AMC has been working hard to demonstrate sustainable growth. Its decline of more than 37% over the past six months reveals nothing has worked.
While many small-scale investors remain committed to AMC stock, insiders have been bailing. The company has attempted to cash in on the recent mining boom, but its best catalyst over the past half year has been the release of Spiderman: No Way Home.
Today, there now doesn’t seem to be any way home for AMC Entertainment. Superheroes couldn’t save it. A TIME magazine ranking won’t either.
On the date of publication, Samuel O’Brient did not hold (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.
