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Why AMC Stock Soared Today

By Joe Tenebruso - Feb 22, 2021 at 7:50PM

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The theater chain is set to resume operations in a major market.

What happened

Shares of AMC Entertainment (AMC -1.08%) jumped 15.3% on Monday after Governor Andrew Cuomo said movie theaters could reopen in New York City on March 5. 

So what

New York's reopening plan comes with some stipulations. Theaters can operate at 25% capacity, while guests will be limited to a maximum of 50 people per screen. "Assigned seating, social distancing, and other health precautions will be in place," Cuomo said. 

Still, investors cheered the news, and rightfully so. The ability to once again operate its venues in a major market is certainly a positive for the struggling movie theater chain. AMC moved quickly to seize the opportunity.

An empty movie theater.

Image source: AMC Entertainment.

AMC said it would reopen all 13 of its theaters in New York City starting on March 5. "Governor Cuomo's announcement that movie theaters can reopen in New York City in the first week of March is another important step toward restoring the health of the movie theater industry and of our company," AMC CEO Adam Aron said in a press release. 

Now what 

AMC will implement new health and safety procedures that it developed in collaboration with Clorox and Harvard University. These include social distancing measures, mandatory mask-wearing, upgraded air filtration systems, and increased sanitization efforts.

However, while necessary, the cost of these procedures will likely weigh on AMC's profitability. It also remains to be seen whether people will rush back to theaters during the coronavirus pandemic or simply watch movies in the comfort and safety of their own homes. Although the chance to open more of its theaters is a step toward a potential recovery, AMC's stock remains a high-risk investment.

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AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
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