There Are No AMC Cinemas on the Moon
The theater chain’s stock may be headed there. Its actual business prospects don't look as promising.
You'll need that popcorn for this AMC show.
Photographer: Amir Hamja/BloombergDay traders caught up in the AMC movie-theater meme-stock phenomenon were celebrating Wednesday evening after they pushed the share price from $30 to above $60 purely on collective faith and fantasy. “My AMC” was even trending on Twitter while the cult following counted its winnings. But over in Leawood, Kansas, at the company called AMC Entertainment Holdings Inc. — which employs more than 3,000 people and runs nearly 1,000 cinemas — the lights have dimmed and the real show is about to begin.
The group of retail investors who call themselves apes have rallied behind AMC Chief Executive Officer Adam Aron, a man they affectionately appointed the silverback gorilla. And it is a role he has wholeheartedly embraced. But they don’t seem to appreciate the enormous task awaiting him: to turn around a business that wasn’t looking so hot even before the Covid-19 pandemic. Some of the traders posting memes with Aron’s face superimposed on movie posters such as “The Godfather” are also sharing technical analysis of the stock price to support their case for AMC to go perpetually higher. But what appears to be missing is any discussion of the actual business — its future cash flows, debt and how on earth AMC prospers in the 2020s. There are no cinemas on the moon.