business

How AMC’s stock could drop 85% from here


Meme stocks AMC Theaters (NYSE:CMA) and stoppage of play (NYSE:EMG) remain popular talking points, if not popular holdings.

AMC is now down 75% on the year as CEO Adam Aron continued to issue new shares. His AMC Preferred Stock (NYSE:MONKEY) shares are down 66% just since their August issue.

Gamestop did much better, down just 30% on the year. It could be worse. It might be Amazon (NASDAQ:AMZN).

But the joke is over. Credit Suisse Group (NYSE:CS), which is fighting for its own survival, now has a price target of 95 cents on AMC. It’s 85% less than here.

Fall of the APE Planet

AMC’s meme investor fans called themselves “APE” and Aron gave the preferred stock issued this summer this unusual stock symbol.

He also gave his APEs NFTs, which are digital assets that can in theory be traded. But they are all essentially worthless, whether measured in dollars or cryptocurrencies. A rising chorus now says the same goes for stock.

While the APEs remain in Stocktwits, there is a new defensive in the discussion. One said a gas station coffee pourer told him to sell. AMC’s latest quarterly report showed a loss of $121 million on revenue of $1.16 billion. Its next report is due on November 9. The market cap of the company is $3.3 billion.

Gamestop investors are more optimistic. Some point to a piece of our own Thomas Yeung predicting another short squeeze. That doesn’t mean Yeung is bullish on the company, just that the increase in short positions makes him a candidate for a squeeze.

Gamestop’s latest earnings release saw it lose $108 million for its July quarter, on revenue of $1.13 billion, down 4% from a year earlier. Its next earnings report is due Dec. 14. The company boasts a market capitalization of $7.9 billion, still rich for a retailer.

AMC Stock: What Happens Next?

Gamestop is a stronger title than AMC because its management didn’t sell shares as it fell like AMC’s Aron. There’s hope in the fact that his collectibles business, on which he’s basing his comeback, was up 26% year-over-year in the last quarter.

Personally, I wouldn’t touch any stock with a barge pole. But I could buy more from AMZN.

As of the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

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