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AMC Entertainment: Despite Catalysts, Is Stock too Expensive?

Stock MarketsSep 20, 2021 03:31PM ET
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© Reuters. AMC Entertainment: Despite Catalysts, Is Stock too Expensive?

AMC Entertainment Holdings (NYSE:AMC), Reddit's favorite movie theatre chain, seems to have shrugged off the sell-off of its unprecedented $72 peak. WallStreetBets retail investors still seem as fond as ever of the name, with the stock up over 730% in the past 12 months.

Management has capitalized on the resurgence of its stock, using its funds on efforts that could help it get ticket sales rising again, in spite of the latest rise of Delta variant cases across various parts of the United States.

Despite recent initiatives and potential reopening momentum that could be in the cards for 2022, I can't get behind AMC stock at these heights. So, for now, I am neutral on the name. (See AMC stock charts on TipRanks)

AMC Makes Use of Its Funds

Earlier this month, AMC launched its $25-million ad campaign featuring actress Nicole Kidman. It's a bit out of the ordinary to see a movie theatre company have an ad. Still, if AMC has the funds, it may as well put it to use on marketing initiatives.

Indoor restrictions could go on and off for some unforeseen amount of time. Unfortunately, another variant (perhaps Mu) could drive the wave after Delta has exhausted itself. No amount of marketing or advertising spend could allow AMC to avoid the impact of any future COVID-19 waves.

In fact many avid pre-pandemic moviegoers are likely on the fence about returning to the silver screen, even in states that lack significant restrictions.

Undoubtedly, these fence-sitters would be enticed by AMC's intriguing new ad. Video streaming has really taken a bite out of AMC's slice of the pie, even before the coronavirus recession. So, should the ads pay off, they don't just have Nicole Kidman to thank. They also have WallStreetBets' AMC shareholders, which probably deserve more complimentary popcorn for their ability to hold through recent volatility.

Wall Street's Take

According to TipRanks’ analyst rating consensus, AMC stock comes in as a Hold. Out of four analyst ratings, there are three Holds and one Sell.

The average AMC price target is $11.75. Analyst price targets range from a high of $16 per share, to a low of $7.50 per share.

Bottom Line

There are meaningful catalysts on the horizon for AMC. Recent ad spending and a hot movie slate, with The Matrix Resurrections and No Time to Die coming soon, could propel AMC stock towards its peak.

That said, it is unknown as to when WallStreetBets investors will decide to move on, or if any blockbuster quarter can give a lift to the stock after its phenomenal past-year run.

Disclosure: Joey Frenette doesn't own shares of any mentioned companies at the time of publication.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

AMC Entertainment: Despite Catalysts, Is Stock too Expensive?

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Comments (1)
Black Magik
Black Magik Sep 23, 2021 8:50PM ET
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These price targets are nonsense. lollll can't wait till you people see what's coming.
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