Investors in AMC Entertainment (NYSE:AMC) simply can’t catch a break. Shares of AMC stock are down a whopping 13% today despite a rather intriguing catalyst investors within the AMC community are discussing.
Taylor Swift’s Eras Tour could end up being the highest-grossing tour for a musician of all time. However, Swift is looking to monetize her offering to an even greater extent, offering a concert film. Early reports suggest that this film brought in $2.8 million in “last-minute Thursday night previews,” with the expectation that up to $150 million could be brought in this weekend as a result of the movie’s release.
For AMC, which has the exclusive rights to this movie, that’s a great thing. However, it appears investors are looking past the theater chain’s movie slate, focusing on deeper fundamental issues with the stock right now.
Let’s dive into what investors may want to make of this move for AMC stock.
AMC Stock Sinks Despite Key Catalyst
More blockbuster films are always a good thing for AMC and investors in the theater chain. Indeed, I’m surprised that the expectations are so high for this film, considering die-hard fans can see this tour in person. However, this is the age we live in, and Taylor Swift remains a hot ticket.
For investors, AMC appears to be a stock that’s either viewed as a speculative vehicle to play short squeeze interest or a stock to be avoided. This stock has a history of running when there is positive momentum. That said, when downside momentum builds, AMC stock has a tendency to move just as violently in a downward fashion.
Is it possible that this movie, and a rockstar movie slate, could revive the company and return it to its path to profitability? Perhaps.
However, most conservative investors simply don’t like the balance sheet of this company and the faltering underlying business model that’s plagued AMC for years. Sure, a potential turnaround could happen with this stock. But until the company stops issuing more shares and focuses on producing profitability at any cost, this is a stock I think will continue to see selling pressure moving forward.
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.
