It was a fun run for the meme stocks, but AMC Entertainment Holdings (AMC -0.85%) is proving mortal. Shares of the leading multiplex chain begin this abridged trading week trading 73% below the peak set three weeks ago.
The knocks are real on the movie theater industry, and don't be surprised if many of the people who are buying the stock now haven't stepped into the local AMC since 2019. Box office receipts in this country were down 93% in January when pitted against where ticket sales were a year earlier. The vast majority of AMC theaters have reopened, but crowds are nowhere to be found. The biggest release in the last six months has been seen by less than 2% of the country. The second hottest release was screened by 0.5% of the country.
It's true that theaters have recovered more successfully in certain international markets that are ahead of the curve in silencing the pandemic, but stateside consumers have moved on. They've loaded up on dirt cheap high-def home theater systems. They're inundated with quality content streamed right into their homes. Exhibitors including AMC will find a cruel world waiting for them once the vaccination process plays out. Let's go over why Roku (ROKU -4.68%), Netflix (NFLX -0.60%), and Walt Disney (DIS -2.00%) are better bets for your portfolio.
We're spending a lot of time streaming at home, and a lot of it is being done through Roku. The free-to-use operating system is found in a growing number of stand-alone smart TVs or available through cheap accessories. We'll get a clearer picture on Roku when it reports later this week, but for now we know that Roku is a sticky platform with the 46 million active accounts it had at the end of September averaging 3.5 hours a day of viewing time.
More people streamed Wonder Woman 1984 through HBO Max playing on their Roku than caught it at the movie theater over the holidays. Roku's audience has risen 42% over the past year and average revenue per user keeps climbing. Roku makes enjoying big movies at home so easy, and that's why AMC is going through hard times.
The leading streaming service is a rock star. It kicked off 2021 with 203.7 million paying streaming subscribers worldwide, and with this scalable business model size is everything. Netflix is pushing out its fifth increase since early 2014 and nobody's leaving because no one is pouring that kind of money back into more TV shows and movies.
Several years ago it was a novelty when Netflix snuck a Golden Globes, Emmy, or Oscar entry into award consideration. Now Netflix dominates the accolades. A filmmaker that once aspired to get a project on the big screen now realizes that Netflix will provide the much larger audience. Netflix is killing the game, and there's a reason why "AMC and chill" is not a thing when there is so much going on closer to home.
Sometimes an ally becomes the enemy. Disney was AMC's top supplier in 2019 as the studio behind the country's six highest grossing movies. Now Disney is either pushing out releases or going directly to its growing Disney+ audience with theatrical content.
Disney was able to disrupt its distribution model with direct-to-consumer digital delivery. Disney+ and Hulu now account for more than a quarter of the media giant's revenue, helping ease the shift away from the corner multiplex. Studios want more control over their audiences, and Disney is writing the playbook that smaller media companies will follow in the future.
It's working for the House of Mouse. Disney is hitting new highs even if Disney+ itself isn't expected to be profitable for another three years. Investors get it. They've seen what happens after the credits roll, and right now it doesn't seem as if AMC is going to get more than a bit part in the Hollywood sequel.
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.