Last week, the debut of Taylor Swift: The Eras Tour sent waves of optimism through the AMC Entertainment (NYSE:AMC) investor community. These retail traders had reason to be excited. Anticipation for Swift’s concert film had been rising for months since her historic tour revealed the power of her fan base.
The New York Times described the documentary’s opening as “easily the biggest concert film opening ever.” It also noted that projections saw the movie grossing up to $95 million between the U.S. and Canada. Everything looked rosy heading into the premiere.
However, as InvestorPlace contributor Chris MacDonald reported, the Eras Tour release did not boost AMC stock. On the contrary, shares fell 13% on the day the film debuted, and they haven’t rebounded since.
Given the strong hype behind the film’s premiere, this might seem strange. But a quick look into AMC stock reveals that shares are being negatively impacted by another news story, one that centers around the company’s CEO Adam Aron.
What’s Happening With AMC Stock
After garnering some momentum early in the month, AMC stock fell last week on a shocking report. An exclusive news story revealed that Aron had been the victim of an extortion scheme. While this scam did not occur this year, it only came to light recently. As Semafor reports:
“The outlines of the catfishing scam, which included demands for hush money and threats to tell the press and AMC’s board, were laid out in a 2022 federal indictment of a Bronx woman, who pleaded guilty this summer. Aron is ‘Victim 1,’ described at the time only as a public-company CEO, according to biographical details in documents filed in the Southern District of New York and confirmed by people familiar with the matter.”
Aron, a popular figure among parts of AMC’s retail investor base, confronted the story head on after it broke. He laid out his story in a detailed post on X, a platform he often uses to discuss matters involving AMC stock.
Throughout my long career, I have successfully led many prominent companies and am proud of my impeccable reputation. In recent years, AMC's millions of retail shareholders have played a central role in my life. Your passion for our company is one of my key motivators in doing…
— Adam Aron (@CEOAdam) October 12, 2023
Some may view Aron’s willingness to confront the story so openly as admirable. But, unfortunately for investors, the market isn’t reacting well. The fact that AMC stock is down almost 3% today demonstrates that for all of Swift’s popularity, Wall Street is more concerned with the Adam Aron story than the Taylor Swift one.
Adam Aron vs. Taylor Swift
There’s no denying that Taylor Swift is an icon of both music and culture. But her recent tour and movie has also made it clear that she can help spur economic growth. As the Washington Post recently reported, “the massive production not only provided a jolt of money to sold-out stadiums — it also infused the American economy with a trickle-down flow of cash.”
With this in mind, it’s easy to see why investors believed partnering with her, as well as fellow music icon Beyoncé, could help boost AMC stock. But both partnerships have been overshadowed by the Aron story and there’s no telling when this storm will pass.
As InvestorPlace contributor Larry Ramer reports, AMC stock is currently falling victim to the “buy the rumor, sell the news” phenomenon. Sometimes buying on speculation works, but when it comes to meme stocks, it can prove especially risky. Today has been a good reminder why.
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.
