It's been a rough run lately for a lot of former market darlings, and meme stocks that skyrocketed higher earlier this year are losing altitude fast. Shares of AMC Entertainment Holdings (AMC) have fallen in eight of the past nine trading days, shedding more than 30% of their value in the process.
Even on Monday -- when most stocks that took a beating last week started to show signs of life -- AMC couldn't cling to its initial gains. It's sobering, but the stock is now more than 60% below its June highs. Everyone thinks they've got diamond hands, until they realize they were crafted in cubic zirconia. Everyone wants to enlist in the Ape Army, until things start to go bananas.
Image source: Getty Images.
Rotten tomatoes
Movie houses aren't anywhere close to where they were before the pandemic. Less than $52 million in box office receipts were collected across the country over the weekend, the industry's worst showing in more than two months. There's historically a sharp sequential dip in attendance following the Thanksgiving holiday weekend, but this is also a 42% decline from the same period in 2019.
Is it the omicron variant, a lack of compelling releases, or just folks generally disinterested in returning to the corner multiplex? No matter how you slice it, only a little more than 5 million people went to a U.S. screening over the weekend. Roughly 2 million of those went to an AMC.
AMC has more than 4 million retail investors. Imagine if they put the same passion into the ownership process as they did into the product itself. Forget diamond hands. I'm talking about diamond butts -- in multiplex seats.
CEO Adam Aron is doing a great job of trying to convert shareholders into weekly customers. He set up a program for AMC stockholders -- or anyone who says they are -- to receive a complimentary popcorn and the occasional free screening in exchange for opting into AMC email blasts. The chain is now offering non-fungible tokens -- or NFTs -- to program members, something that's apparently working out better for the NFT platform than AMC itself. Aron has announced two NFT promotions over the past two weeks, and in that time the stock has fallen by 30%.
There's no shortage of charismatic YouTubers and social media influencers with limited investing backgrounds rallying fellow green investors to pile into the stock alongside them. They're embracing conspiracy theories that even Aron himself has had to shoot down, trying to make owning a stock that is overvalued relative to its peers seem like a club membership. These influencers will call out anyone who disagrees with them as having an agenda, when in reality they're in deep because they can cash in on the status and monetization perks that come with attracting more platform followers.
Imagine if all of that big cult energy was funneled into getting retail investors to pick up the cadence of attendance at the local AMC outpost. Make that next video about dark pools or burning the hedgies about the improved in-theater concessions or what a great deal it is to rent out an entire screening for family and friends.
Instead of trying to justify why AMC has had to increase its outstanding shares nearly fivefold over the past year -- making this the equivalent of the classic I Love Lucy episode where Lucy Ricardo and Ethel Mertz are trying in vain to wrap chocolates as they roll off the conveyor belt at a faster clip than they can handle -- what if they just convinced more people to consume the product alongside them so demand can keep up with valuation supply?
"I think we're fighting a losing game," Ricardo concludes.
Speaking of, Aron was at a star-studded screening of Being the Ricardos on Sunday night. He promoted his appearance, naturally prompting the 400-seat theater to sell out. Apes are fine, but Aron's approach is what AMC stock needs right now.
