The stock market has been turbulent recently, and the spell of mixed performance seemed likely to continue based on Tuesday morning's premarket moves. As of 8:15 a.m., futures contracts on the Dow Jones Industrial Average (^DJI 2.12%) were up 20 points to 35,665, but S&P 500 (^GSPC 1.45%) futures had fallen 8 points to 4,661, and the Nasdaq Composite (^IXIC 1.07%) saw its futures contracts drop 76 points to 16,006.
Meme stocks had hit big highs in recent months, but the market has started to let some of the air out of their ballooning share prices. AMC Entertainment Holdings (AMC) has fallen by nearly half in the last month, and its stock was giving up even more ground in premarket trading Tuesday morning. However, a stock that only recently went public suffered even bigger losses before the market opened. Below, we'll look at why AMC has hit the skids and also look into the initial public offering (IPO) stock that's making news.
Lights out for AMC?
Shares of AMC Entertainment were down another 6% in premarket trading on Tuesday morning. That followed a 15% decline on Monday as investors seemed to grasp the challenges the movie theater operator is facing.
The bullish thesis for AMC was that as COVID-19 pandemic conditions improved, people would return to movie theaters in droves. Unfortunately, that hasn't really been happening. Part of the issue is that Hollywood has been reluctant to release big pictures to audiences that still haven't fully committed to going back to theaters. But even some attempts to release potential blockbusters have fallen flat, indicating that people just don't like what they're seeing in the movie listings.
At the same time, the pandemic continues to evolve rather than disappear. With case counts on the rise in key areas like the Midwest and Northeast, it's entirely possible that new restrictions could come in the near future. Movie theaters have typically been on the front line of such limitations, and that could delay AMC's recovery even further.
AMC has been able to shore up its finances well because of its soaring stock price, but insider selling has weighed on sentiment. It's important to remember that AMC started the year just above $2 per share, so there could be a lot further to fall if shareholders really lose confidence.
A blurry picture from Planet
An even bigger drop of 16% came from Planet Labs (PL). The satellite imaging specialist reported its first set of financial results since it completed its merger with special purpose acquisition (SPAC) company dMY Technology Group, and investors weren't too happy with the picture the space stock painted.
Planet's numbers showed growth. Revenue of $31.7 million was up 16% from year-earlier levels, with Planet boasting 742 customers at the end of the quarter, up 32% year over year. Losses widened, but the company was able to improve its gross margin by 7 percentage points to 34%.
The big question, though, is how Planet will use the roughly $590 million it raised in its SPAC IPO to launch its business to the next level. Investors didn't seem too excited about Monday's announcement that Planet had completed its acquisition of agricultural imaging company VanderSat, perhaps because of its decision to finance the deal with almost two-thirds stock rather than using its more plentiful cash.
Planet has ambitious plans to grow its revenue over the next five years. Today, though, shareholders don't seem to have the confidence that the newly public stock will reach that full potential.