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AMC Stock: Eliminate volatility and keep AMC


  • AMC Entertainment (CMA) has been showing erratic price action recently.
  • Wall Street seems to ignore the catalysts of positive news for the company.
  • Investors should hold on to a bumpy but potentially profitable ride.

Credit: Ian Dewar Photography / Shutterstock

Since the start of Covid-19, the global cinema channel AMC Entertainment (NYSE:CMA) has had its share of ups and downs. For investors, however, holding onto AMC stock should pay off in the long run.

The funny thing is that some traders bought and sold AMC shares without caring about company fundamentals. When Reddit traders got involved, it was all about memes and get-rich-quick dreams.

Even today, AMC stock continues to move wildly, and the bulls even have a nickname: “Monkeys.” CEO Adam Aron hasn’t shied away from the rage of meme stocks and even seems to embrace the phenomenon.

So, don’t expect volatility to decrease anytime soon. Instead, you’re urged to take a long view as AMC Entertainment might be on the comeback trail, memes or no memes.

CMA AMC Entertainment $15.89

What’s going on with AMC Stock?

Here is an example of what I mean by “volatility”. AMC stock jumped 7% on April 19, then fell 7% the following day. Obviously, this isn’t the type of asset that’s right for everyone’s retirement account.

Instead, think of an investment in AMC Entertainment as a movie full of action, adventure, and thrills. Hopefully this one will have a happy ending.

The company was hit hard, financially speaking, by Covid-19 a few years ago. In 2022, AMC Entertainment must prove to investors that it is back on track and in expansion mode.

Just recently, comrade InvestorPlace Contributor Will Ashworth alerted his readers that AMC Entertainment had acquired new movie theater locations. So clearly the business is growing, and that’s a positive sign.

Going straight to the source, AMC Entertainment revealed that the company has signed a deal with Bow Tie Cinemas to purchase and operate seven movie theaters in Connecticut, Upstate New York and Annapolis, Maryland. In total, the deal included seven locations and 66 screens.

Aron, little known for his modesty, indulged in some justified boasting to mark the event:

Our theater acquisition strategy is making AMC a better and stronger company as we move forward on our path to recovery. The acquisition of these locations is particularly notable for our expansion into Connecticut, where we have more than doubled our presence.

A golden opportunity?

“Glidepath” is an unusual term, but perhaps it’s apt because theater acquisitions point to a comeback underway for AMC.

Curiously, however, AMC “Entertainment” is no longer entirely an entertainment company. As you may have heard, the company buys 22% of Hycroft mining holding company (NASDAQ:HYMC), a Nevada-based gold and silver mining company.

To be honest, many marketers are probably still trying to adjust to this new direction for AMC. Now, savvy shareholders will have to pay attention not only to the movie industry, but also to the precious metals market.

In the press release, Aron made an unusual statement regarding the acquisition of Hycroft.

It too has rock-solid assets, but for various reasons it faced a serious and immediate liquidity problem. Its share price fell as a result. We are convinced that our involvement can greatly help him overcome his challenges, for his benefit and ours.

Typically, a CEO would not report an investment target’s “serious and immediate liquidity problem”. Still, Hycroft’s stake could be a boon if gold and silver prices rise this year.

What you can do now with AMC Stock

Investors should not simply view AMC shares as similar stocks. The company appears to be expanding its presence in the market, and the stake in Hycroft Mining could add significant value.

Do not upload AMC shares irresponsibly. Feel free to take a moderate stance and be prepared for large stock price moves in either direction.

As of the date of publication, David Moadel had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

David Moadel has delivered compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga and (of course) InvestorPlace.com. He is also the Chief Analyst and Market Researcher for Portfolio Wealth Global and hosts the popular YouTube financial channel Looking at the Markets.

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