At the start of this year, we witnessed massive changes. Retail traders and other players in the market were all looking to trade in stocks with low interest. AMC stock was one of the best trades even though the administrators had an intention to raise its capital. All the same, there found a way to stop these error in time, although for AMC it was not the best option — it was the prudent and smart thing to do.
It was not AMC mistake that they ended in a liquidity mess. With the global Coronavirus Pandemic which has locked down many business doors. Visiting packed movie theaters is not one of the best practices, in many states. And with such a situation, there is little a company like this one can achieve.
The fall of AMC stock:
– It was a very wise decision for the company to raise its capital. In fact, It did that more than once.
– Raising shares ensures that the company can move on with its functions waiting until the end of Corona. The U.S.A is vaccinating at an impressive rate, and the majority are ready to resume to normal, but we are still not yet there.
– AMC raised more than $900 million by the end of January, they later sold 43 million shares to make a total of $425 million in April. That was a forced necessity.
– We have also witnessed a disruption in the global movie supply chain. Most movie companies did not make their releases last year due to the pandemic. This effect will make its way to the theater business, impacting AMC stock.
– Despite the years of hardship, AMC is estimating a revenue addition of $4.8 billion by the year 2022. Which will be less with approximately $5.46 billion it had averaged in 2018 and 2019 before the pandemic.
– AMC has incurred large losses and is expected to increase losses in the near future to the end of Corona. Its recovery of revenue is a good sign, but its movement is discouraging.
That said, you cannot invest in stock for sympathy reasons. AMC made the correct moves to exist by selling more shares and raising capital. However, you cannot invest in existing businesses. That’s not an investment agenda. We want to invest with thrivers, and not “survivors”.
Conclusion
Analysts are approximating more losses for the coming two financial years. This year, it is estimated that AMC will experience a $3.25 share loss. While 2022 calls for nearly $1 per share. Without downgrading AMC at its worst period, but the movie theater lost over $4.5 billion in the year 2020.
