Although meme stock AMC Entertainment (NYSE:AMC) has maintained its momentum due to retail investors’ interest, the company’s fundamentals exhibit bleak prospects. In contrast, other stocks in the entertainment space, i.e., Comcast (CMCSA), SONY Group (SONY), and Activision Blizzard (ATVI), have solid growth potential because they are strategizing and building new platforms to keep pace with the industry trends. So, let’s discuss these names.Due to rapid technological advancements, the media and entertainment industry has evolved dramatically in recent years. With progress in 5G deployment, industry participants aim to strengthen their market presence because when paired with developments in artificial intelligence and virtual reality, the new network standard could revolutionize the entertainment industry. The global entertainment market is expected to reach $38.72 billion by 2025, growing at a 4% CAGR.
Despite the favorable backdrop, leading movie theater chain operator AMC Entertainment Holdings Inc. (AMC) hasn’t been able to keep up with industry trends. Consequently, AMC’s net loss came in at $566.9 million in its last reported quarter, and its operating loss was $427.8 million. Although the stock is up 1560.4% so far this year due to retail investors’ social-media-triggered interest, we think its excessively stretched valuation could lead to a downtrend in the near term.
In contrast, top entertainment companies Comcast Corporation (NASDAQ:CMCSA), Sony Group Corporation (NYSE:SONY), and Activision Blizzard Inc. (NASDAQ:ATVI) will likely experience a surge in demand because they are investing extensively in R&D to introduce new games and entertainment platforms aligned with consumer interest. Therefore, we believe these stocks are better bets than AMC.