Cineplex operator AMC Entertainment (NYSE:AMC) is attempting to instill faith in investors, though Monday’s 11% decline obviously isn’t helping. A disappointing financial disclosure combined with a seeming disconnect in messaging has clouded AMC stock.
Last Friday, AMC head executive Adam Aron posted satisfaction with the company’s financial results, noting that they were “stronger than consensus analysts estimates.” Per the official press release, net loss for the quarter ended March 31 will come in at $163.5 million. That’s a solid improvement compared to the year-ago quarter’s net loss of $235.5 million.
However, the market appeared fixated on the top line. In the first quarter, AMC estimates revenue to land at $951.4 million, down from $954.4 million one year ago.
Aron explained that “the box office in the first quarter was adversely impacted by the 2023 Hollywood writers and actors strikes. Nonetheless, AMC outperformed. AMC exceeded consensus estimates for Revenue, Adjusted EBITDA, Net Income, and Diluted EPS.”
Moreover, the AMC Chairman and CEO expressed optimism about upcoming film releases. Further, Aron expects “to see an increasingly strong box office as the year progresses.”
Talk Appears Cheap for AMC Stock
Despite the warm words, some retail investors have expressed disappointment with AMC stock. That’s no surprise. Since the beginning of the year, shares have lost more than 50% of their market value, and in the past year, they’re down 93%.
One of the more biting responses to Aron’s tweet concerns insider selling. According to data from Fintel, there have been 183 insider selling transactions, compared to only 10 insider buys of AMC stock.
In fairness, executives sell shares of their own companies for a variety of reasons, many of them mundane. At the same time, when insiders buy, it’s usually for only one rational reason: they believe the target security will move higher. The lack of insider purchases of AMC stock doesn’t directly translate to a lack of belief. However, the overwhelming ratio between buys and sells detracts from Aron’s messaging.
Interestingly, analysts have been relatively supportive of AMC stock while largely maintaining a neutral outlook. Should sentiment at the box office, the cineplex operator could gradually march higher. However, no analyst is willing to stick their neck out with a buy rating.
Why It Matters
Overall, it’s difficult for anyone other than speculators to get excited about AMC stock. The expert consensus sits as a moderate sell, with four holds and three sells. However, with the security carrying a short interest of 18.4% of its float, betting against AMC also carries significant risks.
On the date of publication, Josh Enomoto 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.
