AMC Entertainment Holdings (NYSE:AMC) stock fell again on a report its movie theater business may never recover.
Goldman Sachs issued the warning. They note that box office receipts remain one-third below pre-pandemic levels.
AMC is now down 75% from where it started in 2022. It trades at just over 10% of its 2021 peak of nearly $60/share.
Meme Days Indeed
Once upon a time, in 2019, AMC sold $5.5 billion in tickets each year. Shares sold in the low teens, but it offered a respectable dividend of 80 cents/share. In 2018 it even issued a “special dividend” worth $1.55.
But Covid-19 wrecked the movie business. Studios started sending their films straight to streaming. AMC was trading near $2 last year when it became a “meme stock,” one favored by small investors organized by Reddit’s WallStreetBets forum specifically to squeeze short sellers.
CEO Adam Aron has since ridden those memes to sell more stock. When current shareholders objected to more common stock offerings he created preferred shares called AMC Preferred Equity Units (NYSE:APE) under the ticker symbol APE. The ticker and name celebrate the meme-y retail traders that kept AMC stock afloat during the worst of the pandemic. Those shares, whose claims on assets would go ahead of common stock in a bankruptcy, opened on Oct. 11 below $2. The common stock sold at $6.40.
The hope has always been that the movie business would find a way to come back once the pandemic ended. The Goldman Sachs report threw cold water on that. More cold water came when the owner of rival Regal Cinemas filed for bankruptcy last month.
AMC Stock: So What Happens Now?
But as Mel Brooks’ play (and movie) “The Producers” and CEO Aron have shown, sometimes you can make more money with a flop than with a hit.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.