AMC Entertainment Holdings, Inc. (AMC) stock prices were up by a promising 13.19% as of market close on April 26th, 2021, bringing the price per share up to USD$11.5 as of the end of the trading day. Subsequent pre-market fluctuations saw the stock climb 2.87% to hit USD11.83.
Shorting AMC
Being one of the most popularized stocks of the previous year, AMC is regularly the target of short sellers who expect the stock prices to plummet. March saw an increase of nearly 50% in the volume of short sales, bringing the total up to a very significant 73.8 million shares. In a bid to counter institutional investors to profit from the shorts, retail investors have collaborated on the social media site Reddit to drive AMC stock prices up.
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500 Million Shares to be Offered
The company recently disclosed its plans to issue 500 million shares in a bid to raise capital for the growth of the company, with many fearing such a significant dilution could spell doom for the investors who have kept the company afloat. The CEO, however, has assured the public that the shares will not be sold in 2021, but are a means for the company to conduct its long-term growth plan. Seeing the company capitalize on its fortuitous support from the online community to sustain itself has been highly promising for investors, and such concrete considerations of and plans for the future inspire investor confidence.
AMC Ravaged by Pandemic
While 2019 saw revenues averaging USD$450 million every month, the pandemic absolutely decimated that revenue. Revenues fell to virtually zero as the COVID-19 pandemic gripped the world and resulted in worldwide government-mandated regulations and restrictions. Theaters were closed indefinitely, and AMC was devastated. The company has found itself mere weeks from complete insolvency a total of five times over the past year. Fortunately, it has restructured its finances and has enough cash on hand to make it through 2021.
Hope for Theaters
With theaters closing down permanently under the sustained weight of pandemic-related indefinite closures, investors are desperate for a re-opening. Given the global push for universalized immunizations and the gradual easing up of government restrictions, the company is hoping to survive long enough to capitalize on the expected boom once theatres are allowed to reopen without any restrictions.
Future Outlook for AMC
As more and more theaters reopen across the U.S., with the global entertainment landscape expected to follow suit, investors are banking on pent-up demand from audiences that have been deprived for over a year. They are hopeful that AMC can both outlast the pandemic and capitalize on the increased demand and lower supply in regard to theaters once the pandemic is over.
