AMC Entertainment (AMC 6.37%) blew out the lone candle on the birthday cake of AMC Stubs A-List on Wednesday. The game-changing movie theater subscription service launched a year ago, and it already has more than 860,000 members paying at least $19.95 a month for access to as many as three screenings a month across standard and premium multiplex formats. 

AMC Stubs A-List is a winner at its first birthday party, but the proud parent cheering its toddler's achievements has been a surprising loser. AMC Entertainment stock is hitting 52-week lows this week, closing in the single digits for the first time since late 2017. The stock has shed 32% of its value since launching the service, surrendering more than half of its value since peaking last September. It's a cruel plot twist that few saw coming when the disrupted became the disruptor.

Reclining leather seats at AMC's Lake in the Hills multiplex.

Image source: AMC Entertainment.

Fade to black

AMC Stubs A-List is a hit with moviegoers, obliterating the third-party competition in its wake. Sinemia called it quits for its stateside operations in April, and Helios and Matheson Analytics(HMNY) MoviePass -- the platform that became the niche's first mainstream hit -- is on its last legs. 

Third-party disruptors never stood a chance. They did offer cheap prices to get a foot into the multiplex door, with Helios and Matheson shocking the industry two summers ago by slashing the MoviePass price for unlimited daily standard screenings to less than $10. However, the model was never going to be sustainable. Helios and Matheson was losing money after even a single ticket was purchased, and it had to pay face value for its admissions. 

AMC Entertainment may have come in last summer charging twice as much, but it was sustainable. AMC could afford to surrender a profit at the box office, knowing it could more than make it back in concessions. With exhibitors struggling for relevance in an age where streaming services and high-def home theaters make a night at the movies less tempting, AMC was willing to disrupt itself -- and it's working. AMC Stubs A-List now has 860,129 members, and they have filled more than 20 million seats that might have otherwise gone empty. 

The stock isn't playing along for a few reasons. One primary concern is that the slate for 2020 releases isn't as impressive as the blockbusters rolling out this year. However, AMC Entertainment itself has also disappointed. It has posted a much larger deficit than expected in two of the past three quarters, and analysts see a loss this year after a profitable 2018. Wall Street sees AMC Entertainment roughly breaking even come 2020. 

AMC Entertainment has also failed to appeal to income investors, even though the plummeting shares have boosted the yield to a hearty 8.5%. The country's largest movie theater chain has been shelling out $0.20 a share in quarterly dividends for five years. 

We will never know where the stock would be without AMC Stubs A-List. We don't know how many of those 20 million tickets claimed by subscribers would've been sold at face value without the subscription service. Rolling out the service was a gutsy call, and the same can be said about the move to raise subscription prices by 10% to 20% in its priciest states. AMC Entertainment stock is being punished because it's a multiplex operator in a challenging environment for the industry, not because it was willing to disrupt the disruptors.  

AMC Entertainment has outlived Sinemia, and it will inevitably outlast Helios and Matheson's MoviePass. It will still need a Hollywood ending to beat out the bears.