Please ensure Javascript is enabled for purposes of website accessibility

Why AMC Entertainment Dropped Over 10% Today

By Rich Duprey - May 13, 2020 at 4:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

No one likes talk of an extended recession.

What happened

Shares of movie theater operator AMC Entertainment (AMC -1.64%) tumbled more than 10% today, after Federal Reserve Chairman Jerome Powell weighed in on the prospects for an economic recovery and promptly scared the heck out of everyone.

So what

The hope has been all that we'd need for the economy to get going again was to open up the states and allow businesses to get back to work. Things could then pick up about where they left off.

Powell's comments today, however, threw all the wet towels on that idea, saying it was "highly uncertain" the economy would quickly bounce back. He noted, "The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II."

Man holding head in front of down stock chart

Image source: Getty Images.

Now what

AMC Entertainment has been on tenterhooks since the pandemic began and its movie theaters were closed. It was on the brink of filing for bankruptcy protection when it was able to arrange financing to forestall that option.

The country's largest theater operator plans to begin opening its movie houses next month, and while it acknowledged its rebound is likely to be slow, the market is assuming it may even be slower than that, which raises the specter of AMC's viability.

The one hopeful thing is the experts have been wrong about so many aspects of this pandemic that it's possible a V-shaped recovery will still occur. No one's holding their breath waiting for that to happen, though.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$12.57 (-1.64%) $0.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.