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Why AMC Entertainment Stock Bounced Early Tuesday

By Howard Smith - Feb 23, 2021 at 10:16AM

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The global theater operator is starting to see light at the end of the tunnel.

What happened

Going against a market that is largely dropping Tuesday, shares of theater operator AMC Entertainment Holdings (AMC -1.08%) jumped 15% at the market open. Shares gave up most of those gains to remain up about 2% as of 10 a.m. EST.

So what

After a very volatile month influenced by Reddit chat room retail traders, investors are beginning to be able to see the company in a post-pandemic world. Today's bit of light is the announcement that New York City movie theaters will be able to reopen on March 5, after almost a full year of closures. 

movie theater screen showing reopening soon sign

Image source: Getty Images.

Now what

After raising nearly $1 billion in capital, AMC president and CEO Adam Aron said in January, "This means that any talk of an imminent bankruptcy for AMC is completely off the table." The company subsequently announced a new equity offering raising another $305 million when shares rose with the Reddit-influenced market moves. 

At a news conference yesterday, New York Gov. Andrew Cuomo announced New York City theaters can begin opening at 25% capacity on March 5. Theaters will need to assign seating to maintain social distancing, and a maximum of 50 people will be allowed per screening. 

But with sufficient capital, and another sign of a return toward normalcy, investors are once again paying attention to entertainment stocks like AMC. Today's initial bounce wore off quickly, but as the business returns, investors will continue to be interested in these types of recovery names.

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