5 Reasons to Sell AMC Entertainment – The Motley Fool

by | Sep 18, 2022 | Entertainment

Investors are always balancing risk and reward, but emotion can bedevil even the best-laid plans, which is why anyone who owns AMC Entertainment (AMC -9.11%) stock today needs to step back and question why. Indeed, there are a host of reasons why you shouldn’t. Here are a few to test your investment thesis.
1. A roller coaster 
Volatility is hard to deal with for most investors. It leads to emotional duress and, ultimately, bad decision-making. Shares of AMC Entertainment, one of the world’s largest movie theater operators, rose around 800% in a virtually vertical climb in early 2021 only to plunge shortly thereafter. Then, in late 2021, the stock rose sharply again, taking the year-to-date gain to over 2,500%! 

Image source: Getty Images.

Since that point, the stock has been in a lengthy downtrend, with gut-wrenching up and down moves along the way. The shares are now off over 80% from their peak. This is a level of volatility that few investors could stomach without some impact on their emotional well-being. 
2. It’s a meme thing
What exactly is going on? The answer is pretty simple: Message board denizens have (for various reasons) decided that AMC is a fun stock to talk about and trade. In market terminology, it’s a meme stock. The problem is that meme stocks move in dramatic and unpredictable ways. This is because the message board folks aren’t basing their decisions on fundamentals, but on whims and rumors.
And that means there’s no way to predict which way the AMC winds will blow next. If you prize fact over fiction, you’ll probably want to avoid all meme stocks.
3. Still struggling
The interesting thing is that AMC’s business is doing pretty poorly, and that’s been the case since the coronavirus pandemic first reared its ugly head in 2020. That’s not shocking, given that social distancing is hard to do in a movie theater.
But even in the most recent quarter, long after the most strict government guidelines had faded, the company lost $0.20 per share. While that was an improvement over the year-ago loss of $0.71, it’s still a loss.
Nevertheless, the stock is now up over 350% since the start of 2020, even though the business i …

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