$AMC — More than a Meme?

Jul 03, 2021

AMC is the largest movie theater chain in the world, with 950 theaters and 10,500 screens globally.

But this was NOT the business you wanted to be in last year.

Movie theater demand was decimated during COVID.

In FY 2020, AMC revenue dropped -77% YoY and U.S. attendance fell -81% YoY.

AMC was within weeks or months of running out of cash five different times between April 2020 and January 2021.

But most of you have seen AMC in headlines recently because of a group of spirited traders on Reddit…

Not Your Typical Penny Stock “Pump and Dump”

In January 2021, AMC emerged as a quintessential meme stock when Reddit retail traders pivoted from a successful GameStop push to drive AMC shares higher.

You can see this surge in activity on the chart below, displaying stock chatter mentions.

While shares surged, the company secured a European financing deal (+$400 million) on top of other equity and debt capital, avoiding bankruptcy.

But there are two huge differences between AMC’s run and penny stock pump-and-dump schemes of the past:

  1. AMC has a legitimate business.
  2. Many in the Reddit army aren’t dumping.

Instead of feeding the pump frenzy with press releases, AMC issued millions of shares into the market in an attempt to stay solvent.

At the end of 2019, AMC had 103.9 million shares outstanding. By last month, that number had grown almost five-fold to more than 500 million shares outstanding.

But how is AMC performing from a consumer perspective?

AMC Has a Steep Hill to Climb

Mentions of Going to the Movies have increased +28% QoQ, but remain -59% lower vs. 2019.

AMC is likely the best positioned to take advantage of reopening.

The company noted market-share capture on its last earnings call: +25% vs. pre-pandemic levels, with a total share of 33%.

However, consumers are increasingly receptive to streaming theatrical releases, which directly compete with the in-person movie experience that AMC offers.

Mentions of streaming a new release surged in the last year, sparked by Disney’s release of Mulan (for $30), and Warner Bros.’ plans to release new features simultaneously on HBO Max and in theaters.

Streaming new theatrical release mentions are now settling +92% higher vs. 2019.

Despite this emerging competition, AMC is confident it can capitalize on pent-up consumer demand as localities reopen, with the CEO stating: “Well, people have been so deprived of something that they love. People love going to the movies. All the talk about streaming that we hear, people love going to theaters. It happened a billion times in the United States in 2019.”

We’ll be watching this trend and consumer-facing data to confirm if demand materializes.

With Meme Stocks, it Helps to Have an Extra Edge

Due to the meme-nature of the beast, we’re not just listening to consumer-facing chatter about AMC.

We’re also listening for what traders have to say. Yes, at LikeFolio, we can do that, too.

We separate and feature this type of data in our Stock Chatter Alerts, where we alert users to abnormal spikes in investor chatter on social media.

In fact, we’ve issued stock chatter alerts for AMC when shares were at $13.18 and $27.14, resulting in huge gains for investors still holding today.

This double-pronged approach gives us a significant edge when it comes to trading AMC.

Not only do we know when Reddit traders are heating up their enthusiasm, we’ve got a real-time pulse check on consumers actually going to the movies.

Talk about a powerful combo.

Andy Swan,
Founder, LikeFolio