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Why AMC Entertainment Is Jumping 6% Higher

By Rich Duprey - May 25, 2021 at 12:47PM

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The theater owner continues to defy expectations.

What happened

Shares of AMC Entertainment Holdings (AMC -4.01%) were jumping 6% higher in midday trading Tuesday after Citi analyst Jason Bazinet raised his price target on the movie theater chain to $3.70 per share while also maintaining his sell rating on the stock.

So what

Investors continue to ignore what the monied class says about AMC primarily because it is mostly just bearish predictions of a collapse. They may not be wrong, but a lot of the negative views are based on a snapshot in time and dismiss the return of movies and moviegoers to the theaters.

Smiling moviegoers in theater

Image source: Getty Images.

Just as shopping malls are in rough shape, but are still hugely benefiting from so-called "revenge shopping," or consumers going out and shopping just because they can now, theaters could very well see a boom of sorts just because film lovers have been kept out of theaters for so long. They're going to come out even though many studios are simultaneously releasing the films to streaming services.

Now what

There are many structural problems facing AMC to be sure, but it raised sufficient cash during the pandemic to keep the lights on for at least a year or more. With moviegoers just now getting a taste again for going to the theater, the entertainment stock's naysayers could be proven wrong -- at least for the short term.

Rich Duprey 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
AMC Entertainment Holdings, Inc.
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