Movie theater chain AMC Entertainment Holdings (NYSE:AMC) had a hit-and-miss year in 2019, but the misses outclassed the hits. The stock fell 41% last year, consistent with data from S&P Global Market Intelligence, missing out on a general market rally that saw the S&P 500 index rising 29%.
AMC started the year in grand style, rising the maximum amount as 39% year so far within the middle of April. That climb included a 14% single-day hop on March 1 because of a solid fourth-quarter income statement . The AMC Stubs A-List ticket subscription program was popular, and Hollywood kept feeding stage operator an extended string of massive hits.
However, positive moves just like the March jump only served as temporary relief from an extended and deep slide that started in April and continued throughout the year. May’s first-quarter report missed Wall Street’s earnings estimates in spite of a solid top-line showing, triggering a 9% single-day drop and a boatload of negative analyst reports that only increased the market pressure.
That trend never stopped, and AMC remains setting all-time lows on an almost day to day within the youth of 2020.Now what
It’s not hard to ascertain why AMC’s stock is taking a beating. Revenues have remained flat since the buyouts of rival chains Carmike Cinemas and Nordic Cinema Group within the 2016-2017 period, despite a concerted effort to spice up the top-line take with upgrades like premium recliner seats and in-theater dining options. The exact same efforts weighed heavily on AMC’s bottom line, leading to deeply negative earnings and free cash flows.
The company is trying to tap into the digital streaming trend that’s killing the old-school movies business by launching its own streaming service. AMC Theatres Video On Demand gives consumers access to a couple of thousand silver-screen hits on the living-room TV or mobile devices. But that’s more of a pay-per-view option than a monthly subscription service, which makes me think that AMC’s administration still doesn’t understand why streaming platforms are so incredibly popular. it is a shot within the dark, within the wrong direction. AMC would need to renegotiate its content deals so as to truly launch a competitive video-streaming service.
So i would not be surprised to ascertain AMC’s stock sink even lower in 2020, albeit the movie studios come up with a killer slate of big-screen entertainment events this year. This company is investing heavily — in things that basically won’t help AMC compete any better. Leaving this ticker alone is formed easier by the very fact that a number of AMC’s most dangerous digital rivals rank among the simplest investments on the earth immediately .
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