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Ralph Nelson

NEWSBREAK 3/26: Is AMC A Horror Show?

In the last couple of months, we’ve seen the advent if a strange new phenomena fueled by retail investors, zero fee brokerage and a whole lot of hype: meme stocks. The most famous of these—Gamestop (GME)—has seen a radical rise and fall, with value rocketing from $17 at the start of the year all the way up to $480, then back down to $40, then back up to $180. The effect is dizzying and not for the feint of heart.

But other stocks have gotten caught up in the meme storm as well. AMC, the nation’s largest movie theater chain, has had an understandably difficult year amidst the pandemic. With many theaters closed due to state mandates—including major markets in the New York City and Los Angeles metro areas—and studios delaying blockbusters by a year or more, AMC has been forced to raise capital and take on more debt.

All of this comes as studios and their affiliates, from Disney to Paramount, are trying to advance their streaming services. This week, Disney announced further delays of tentpoles including Black Widow. But the real problem for AMC is that Disney and others are reforming their models to release content simultaneously in theaters and on their streaming services. There’s long been a truce of sorts between theaters and home releases—be it DVD or streaming—which gave movie theaters exclusive access to films for a period of time, usually 30 or 45 days. With this gap disappearing, movie theaters are in a precarious position. AMC’s recent capital raise brought in enough cash to make it to 2022, but that was predicated on that exclusive window.

This shows the gap between meme stocks and reality. While AMC may have a bounce back, the hype-storm surrounding it is countered by harsh realities. Many anticipate a flurry of business for AMC once the pandemic is over, but can AMC survive without big name movies putting customers in seats?

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