Please ensure Javascript is enabled for purposes of website accessibility

Why AMC Stock Surged Today

By Joe Tenebruso - Apr 5, 2021 at 6:41PM

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

The movie industry could rebound sooner than many investors expect, according to one investment bank.

What happened

Shares of AMC Entertainment (AMC -8.03%) popped 13% Monday, following bullish analyst commentary. 

So what

B. Riley Securities analyst Eric Wold lifted his rating on the movie theater company's stock from neutral to buy. He sees AMC's share price rising to $13, or roughly 23% higher than its closing price of $10.61.

A person is pointing to a digital stock chart that rises, then falls, then rises again.

Investors bid up AMC's stock price Monday. Image source: Getty Images.

Wold's upgrade came after the strong opening weekend performance of Godzilla vs. Kong. The movie racked up $48.5 million in domestic box office receipts, despite many theaters operating at significantly reduced capacity due to COVID-19 prevention measures. This compared favorably with the previous Godzilla film, King of the Monsters, which generated $47.8 million during its opening weekend in May 2019. 

"These results are very telling, especially considering that the movie was available for free to HBO Max subscribers at the same time as the theatrical release," Wold said. 

Now what

Godzilla vs. Kong's impressive opening weekend suggests that people still enjoy going to the movies, despite the coronavirus-related risks. That bodes well for AMC, which operates the largest number of theaters in the U.S. 

It also comes at a crucial time for the company. AMC needs to bring in enough cash to service its $5.7 billion debt load, a significant portion of which has interest rates above 10%. 

AMC is seeking to sell as many as 500 million new shares to reduce its burdensome debt and bolster its cash reserves, following its near descent into bankruptcy during the pandemic. 

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.
$12.03 (-8.03%) $-1.05

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

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

Premium Investing Services

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