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AMC Entertainment’s APE Stock Heats Up Ahead of Avatar Launch

Something really weird is going on in the world of movie chains and meme stocks. Today the shares of AMC Entertainment (NYSE:CMA) are down nearly 3%, while the company’s preferred shares AMC Preferred Share Units (NYSE:MONKEY) are up nearly 12%. This move in APE stocks is one that intrigues many retail investors, for good reason.

Notably, APE stock hit a new all-time high late last week, plunging below $1 per share. The move came amid lackluster interest in the company’s shares, given previous share issuances. Those worried about the potential for future debt-equity swaps may be less interested in holding these stocks in this environment.

That said, today’s rally appears to be tied to a catch-up trade from last week’s rally in AMC shares. The rise was due to renewed interest in movie stocks amid a bolstered movie slate. It’s the Release of Avatar 2 this again interested many investors in taking a bet on this stock.

Let’s see if AMC, in either form, is worth a bet right now.

Is APE Stock a buy after today’s rally?

The past few weeks for most meme stocks have been extremely volatile. Indeed, the underperformance of APE stocks compared to other meme stocks is notable. Accordingly, some sort of catch-up recovery may be warranted, in this context.

That said, it’s clear that AMC is a company facing some serious headwinds. Of course, this list of moves could be better than the comparable quarter of last year. AMC may lose less money than expected as retail investors expect a boost.

That said, it is also a heavily indebted company that will need to see an incredible increase in margins to show profitability over the next few years. In this environment, investors are likely to focus on more sustainably profitable companies. Thus, I think AMC and APE stocks are too speculative for most investors, even at these dejected levels.

As of the date of publication, Chris MacDonald had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Chris MacDonald’s love of investing has led him to pursue an MBA in finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative long-term investment outlook.


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