Why Is AMC Entertainment (AMC) Stock Up Today?

  • Shares of AMC Entertainment (AMC) have surged more than 5% today.
  • This move comes as the company announces a variable pricing program.
  • Additionally, analysts now forecast a potential sector-wide rebound in theater attendance.
AMC stock - Why Is AMC Entertainment (AMC) Stock Up Today?

One of the most prominent movers in today’s market among retail investors is AMC Entertainment (NYSE:AMC). Shares of AMC stock are up more than 5% in early afternoon trading on an announcement that the company is looking to introduce variable ticket pricing.

“Sightline,” the next evolution of value pricing, will allow theaters to charge higher or lower prices per ticket, depending on a given seat location within an auditorium. For moviegoers, it’s expected that charging along multiple pricing tiers may best meet the needs of the viewing audience while maximizing revenue. Those who want to pay more to sit right in the middle may do so. Those who want to pay the same price can sit near the aisle. And those who want to save their money can sit near the front for the cheapest possible tickets.

Investors appear to be viewing this move positively today. Additionally, various analysts appear to be discussing what could be a sector-wide rebound in theater attendance.

Let’s dive into what to make of today’s news for investors interested in AMC stock.

AMC Stock Surges on Varied Pricing Tiers

I’ve always wondered why variable pricing wasn’t a thing in the movie theater business. Indeed, it’s clear to anyone who’s been to a movie that there are premium seats and, shall we say, less-desirable seats to choose from. While certain theaters allow for seat reservations, the first-come, first-serve model always rubbed me the wrong way. The idea of having to show up a half hour early (or more) for the privilege of overpaying for popcorn and having my seat kicked never enticed me.

That said, I know I would have loved to have saved a little extra cash when I was in college and would happily have picked the “cheap seats.” And today, I’d happily pay extra to sit in the middle. If movie theaters are expected to be packed moving forward, as analysts seem to believe will be the case, then perhaps this sort of variable pricing model may capture the greatest amount of value from consumers. In general, I think it’s a good move.

Of course, it’s unclear just how well this roll out will go. However, it’s good to see AMC’s management team is doing everything it can to try to create value for shareholders. Today’s stock price appreciation appears to reflect this sentiment among investors.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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