Why AMC Entertainment Stock Was Falling Today – The Motley Fool

What happened

Shares of AMC Entertainment Holdings (NYSE:AMC) were cooling off today as the stock got swept up in a broader sell-off of popular day-trading targets like meme stocks and cryptocurrencies.

As of 12:06 p.m. EDT, AMC stock was down 10.1%, while other Reddit stocks like GameStop, Express, and Naked Brand Group were also down substantially.

Image source: AMC Entertainment.

So what

AMC shares had rallied over the last week after the company closed a $428 million at-the-market offering last Thursday, gaining as much as 42% over the four-day period and reaching its highest point since the initial meme-stock rally back in January.

Today, however, the trend in the stock reversed itself as a sell-off in cryptocurrency — which seemed to start when Tesla CEO Elon Musk’s said his company would stop accepting Bitcoin — accelerated today and spread to meme stocks.

Notably, the sell-off in AMC shares came as the U.S. economy is rapidly reopening, a bullish sign for the performance of the business. In fact, today New York, New Jersey, and Connecticut ended most COVID-19 restrictions, an important step in allowing movie theaters to return to full capacity in AMC’s biggest market.

Now what

AMC’s share price has been divorced from the business’ fundamentals since January during the short squeeze that saw shares of AMC, GameStop and other stocks skyrocket in just a few days.

The company’s market value has never been higher despite it now being loaded with high-interest debt and its share count having grown by more than four times during the crisis. Meanwhile, the long-term prospects for movie theaters seem dim given the rise of video streaming.

Despite those concerns, AMC stock seems set to keep trading based on technicals and emotions for the foreseeable future as it’s a favorite of traders on social media who often try to pump the stock higher. Expect the volatility in the entertainment stock to remain.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

from WordPress https://ift.tt/3eZsesu
via IFTTT