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Why AMC Stock Is Rising Today

By Joe Tenebruso – Updated Jun 10, 2020 at 12:40PM

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The movie theater chain may reopen its venues sooner than expected.

What happened

Shares of AMC Entertainment Holdings (AMC 1.78%) jumped on Wednesday after management said it plans to reopen its theaters in July. As of 12:05 p.m. EDT today, AMC's stock was up more than 8%.

So what

AMC was forced to close all of its movie theaters in March after governments issued stay-at-home orders to slow the spread of COVID-19. With little revenue coming in following these closures, AMC quickly began to bleed cash. The chain reported an adjusted net loss of $231.6 million in the first quarter. 

But during a conference call with analysts, CEO Adam Aron said the company intends to reopen nearly all of its theaters in the coming weeks. "Our current plan is to have almost all of our theaters globally operating in July, which is in time for and assumes that the industry stays on schedule for Warner Bros.' release of Christopher Nolan's Tenet, currently scheduled for July 17, followed by Disney's release of Mulan, currently scheduled for July 24," Aron said. 

People are smiling while sitting in a movie theater.

People may soon be able to enjoy movies in AMC's theaters. Image source: Getty Images.

Now what 

The news comes as a relief to shareholders. Just a week ago, AMC warned that it had "substantial doubt" it could remain in business if it did not reopen its theaters soon. 

But risks remain. AMC said it will abide by social-distancing guidelines when it reopens its theaters, including limiting the number of guests who can watch movies. It's also stepping up its cleaning. While necessary, these pandemic-related measures are likely to take a toll on profitability.

Thus, until a vaccine or effective treatment for COVID-19 is found, AMC remains a high-risk stock.

Joe Tenebruso owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short July 2020 $115 calls on Walt Disney. The Motley Fool has a disclosure policy.

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