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Why AMC Entertainment Stock Jumped Monday

By Howard Smith - May 17, 2021 at 1:25PM

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The stock has been regaining momentum and is up more than 50% in the last month.

What happened

Shares of movie theater operator AMC Entertainment Holdings (AMC 16.37%) have been on the move again this month. The stock retreated from unexplainable levels in January after the retail trading crowd bid up shares, cheered on by Reddit users. But the stock has regained that momentum recently, and is up more than 50% in the past month. Today, shares were up more than 6% as of 1 p.m. EDT.

So what

Several things have gone AMC's way recently. Perhaps most notably for the business itself is the statement by the U.S. Centers for Disease Control and Prevention (CDC) last week that vaccinated individuals are protected from COVID-19, and no longer need to wear masks even indoors without social distancing. That opens up movie theaters to get back to full capacity. But also contributing to gains in the last month have been a capital raise and possibly more retail trader attraction to AMC stock. 

blue arrow showing stocks shooting higher

Image source: Getty Images.

Now what

AMC hasn't released a statement yet on the new CDC guidelines. Other consumer-facing businesses have modified mask requirements for vaccinated employees and customers, and some are working through concerns related to local regulations or enforcement for those who aren't vaccinated. 

But there is likely pent-up demand for viewing movies in theaters, and this is a first step back to fully enjoying that experience. Also last week, AMC announced that it raised another $428 million in an at-the-money stock offering, further boosting its balance sheet.

Those positive developments for the long-term recovery of the business likely have more investors buying AMC stock. And the Reddit crowd might also not be finished with this meme stock. As Bitcoin (BTC) tumbles to three-month lows, it's possible that some of that money is also flowing back into AMC. Longer-term investors should focus on the business, though, and there are some positive signs here with a return to pre-pandemic normalcy seemingly closer. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bitcoin. The Motley Fool has a disclosure policy.

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