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Why AMC Entertainment's Stock Is Bouncing Around Today

The Motley Fool logo The Motley Fool 3/4/2021 Rich Duprey
a man standing in front of a crowd: Why AMC Entertainment's Stock Is Bouncing Around Today © Provided by The Motley Fool Why AMC Entertainment's Stock Is Bouncing Around Today

What happened

Shares of AMC Entertainment Holdings (NYSE: AMC) fell 6.7% in morning trading on Thursday, but the movie theater operator was clawing its way back after having been down more than 10% early on.

So what

Although there was no news directly related to AMC, yesterday Disney (NYSE: DIS) CEO Bob Chapek told analysts that the old Hollywood movie distribution model was likely dead and buried.

Because consumer expectations were greatly altered by the pandemic, causing them to become more impatient for releases of new films, Chapek says there's no going back to distributing movies to theaters for exclusive long-term engagements.

a group of people standing in front of a crowd: Moviegoers hiding their eyes © Getty Images Moviegoers hiding their eyes

The experiments movie studios made during the outbreak of releasing big-budget films directly to streaming services or doing day-and-date releases where they simultaneously release films into theaters and to streaming services are here to stay.

Now what

Volatility continues to be the watchword for AMC Entertainment; just the other day, it was spiking 10% higher.

The stock has developed a committed following on Reddit and in other stock chatrooms, and doubting the company's business prospects can earn you their ire. 

Yet AMC has danced with bankruptcy, and just after gaining the funding it needed to survive at least through the end of the year, it decided to dole out more than $8 million in bonuses to executives. CEO Adam Aron got almost half the total for himself.

Look for AMC stock to continue wildly bounce around, but its business still makes a poor case for a moonshot recovery.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.

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