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Why AMC Entertainment Is Falling Today

By Rich Duprey – Jun 24, 2020 at 11:26AM

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The theater operator is still planning to open next month amid pandemic-induced financial woes.

What happened

Shares of AMC Entertainment (AMC -14.52%) are falling 8% in morning trading on Wednesday as continuing worry over rising new cases of COVID-19 weigh on the theater operator.

So what

While AMC has tiptoed along the precipice of bankruptcy during the pandemic, the world's largest theater owner has been gearing up for a reopening of its movie houses in July. A surge in new cases might cause states to clamp down once again.

Couple reacting with surprise to movie

Image source: Getty Images.

Now what

Florida's governor has threatened businesses with losing their licenses if they continue to operate with a "Dance Party USA" atmosphere; New York's governor said gyms, malls, and theaters won't be allowed to resume business during its fourth phase of reopening; and Texas' governor said "tougher actions" will be necessary if the state's caseload continues to increase.

Even if AMC Entertainment is able to open most of its theaters next month, it will still be in a precarious position. It has committed to operating at only 30% of capacity, and even then it's not certain moviegoers will return right away.

Hollywood has been similarly shut down during the pandemic, so there might not be much content to show as many movies that were scheduled for a theatrical release were shifted to pay-per-view streaming channels. A lot of theaters are counting on the new Christopher Nolan spy flick Tenet to get consumers back in the seats.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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AMC Entertainment Holdings, Inc. Stock Quote
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