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Why AMC Stock Popped Today

By Rich Smith – Apr 19, 2021 at 2:21PM

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New York is raising movie theater capacity by 50% in a week.

What happened

Shares of movie theater chain AMC Entertainment Holdings (AMC 2.95%) climbed 3.4% through 3 p.m. EDT Monday after the state of New York announced it will soon increase allowed capacity in its movie theaters by 50%.

As reported this afternoon, New York's new COVID-19 safety guidelines will permit theaters to increase capacity from 25% (currently) to 33% (effective April 26), about a 50% increase.

Small audience cheering in a movie theater

Image source: Getty Images.

So what

This may be only the beginning. With the summer movie season fast approaching, the New York chapter of the National Association of Theatre Owners is asking the governor to continue raising movie theater capacity limits, hoping to get to 50% capacity by Memorial Day (May 31) and then to 75% by July 4 -- "in time for the rollouts of major tentpoles like CruellaA Quiet Place 2F9 and Black Widow."

Elsewhere, California has raised the idea of permitting theaters to resume operating at full capacity by mid-June.

Now what

Deadline notes that New York isn't ready to go that far just yet, adopting "a more gradual approach" to reopening instead. But AMC says it can operate profitably even at only partial capacity. For the time being, analysts continue to forecast losses for AMC -- both this year and next year as well.

Starting next week, AMC will get its chance to prove them wrong.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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AMC Entertainment Holdings, Inc. Stock Quote
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