- Shares of National CineMedia (NASDAQ:NCMI) are popping today on news that AMC Entertainment (NYSE:AMC) has taken a 6.8% stake in the advertising company
- Before today’s move higher, NCMI stock had fallen 54% this year.
- AMC is making the move as it recovers from the ravages of the global pandemic
A regulatory filing with the U.S. Securities and Exchange Commission (SEC) shows that AMC Entertainment, the world’s biggest movie theater chain operator, has taken a new stake in National CineMedia.
News of AMC’s investment is welcome news for National CineMedia shareholders. Prior to today’s increase, NCMI stock had fallen 54% year to date to trade at $1.45 per share.
What Happened With NCMI Stock
The regulatory filing reveals that AMC now holds a 6.8% stake in National CineMedia, which displays advertisements to consumers in movie theaters, online and through mobile technology. The company runs the biggest cinema advertising network in the U.S.
The investment comes as AMC reports improving financial results. Its theaters are fully reopen and moviegoers are returning to cinemas. Analysts and investors see the investment as a vote of confidence in National CineMedia and its advertising business coming out of the Covid-19 crisis.
Why It Matters
Business at the box office is improving as Covid-19 restrictions ease and consumers return to movie theaters to watch big-budget films. The global box office recently got a boost from the release of Marvel movie Doctor Strange In The Multiverse Of Madness, which earned nearly $700 million globally in its first two weeks of release.
Other major movie releases over the summer are expected to help restore movie theater chains such as AMC Entertainment, and, by extension, National CineMedia. Upcoming releases include Top Gun: Maverick, Thor: Love and Thunder and animated film Lightyear. AMC has tried several different things to cope during the pandemic, including selling its popcorn in grocery and convenience stores.
What’s Next for National CineMedia
NCMI stock gets a huge lift today on news that AMC Entertainment now owns nearly 7% of the company. While an encouraging development, investors should keep in mind that National CineMedia remains a penny stock that has declined sharply this year.
On the date of publication, Joel Baglole 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.