Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why AMC Entertainment Is Falling 5% Today

By Rich Duprey - Jan 4, 2021 at 3:35PM

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

Things look bleak for the movie theater operator.

What happened

Shares of AMC Entertainment ( AMC -4.19% ) were down about 5% in afternoon trading on Monday as the Dow Jones Industrial Average tumbled more than 500 points to kick off trading in the new year.

So what

The theater owner filed with the Securities and Exchange Commission last week notice of its intent to sell 50 million shares in an effort to stave off bankruptcy. AMC recently raised $100 million from one of its lenders, but it still needed another $750 million to continue operating through the end of 2021. Some of its lenders have urged it to file for bankruptcy.

The share offering comes weeks after AMC registered 200 million shares to sell to raise cash. 

Theater with signs saying Social Distancing on some seats

Image source: Getty Images.

Now what

The cinema operator has struggled to stay afloat during the pandemic as its theaters are either closed or operating at 50% capacity or less. Compounding its difficulties is that studios postponed the release of their movies until 2021. Those that have been released, even the big-budget flicks like the spy thriller Tenet and the superhero sequel Wonder Woman 1984, have hardly inspired confidence.

While Wonder Woman generated more box office receipts than expected since it was also released to streaming service HBO Max on the same day, consumer response to its contrived story line means the movie crashed in the aftermath. 

Many analysts expect AMC to file for bankruptcy, but the theater operator is looking to hang on for as long as it can until more new releases debut. 

 
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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
$29.01 (-4.19%) $-1.27

*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 service.

Stock Advisor Returns
624%
 
S&P 500 Returns
141%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

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

Our Most Popular Articles

Premium Investing Services

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