Here's Why You Should Avoid AMC After its CEO Sold Shares

NYSE: AMC | AMC Entertainment Holdings, Inc.  News, Ratings, and Charts

AMC – AMC Entertainment (AMC) is well-known among investors thanks to its skyrocketing short squeeze rally last year. Though the stock has exhibited significant momentum over the past year, it is currently trading 71.7% below its all-time high. Furthermore, with the company’s CEO unloading more than $40 million in shares since last November, we think investors are better off avoiding the stock now. Read on to learn more.

AMC Entertainment Holdings Inc. (AMC) is the world’s largest movie exhibition company, with approximately 950 theaters and 10,500 screens across the globe. The company’s shares have soared 843.6% over the past year amid a meme stock frenzy.

However, the stock has plunged 48.7% over the past three months and 16% over the past month, closing the last trading session at $20.57. In addition, it is currently trading 71.7% below its 52-week high.

According to a regulatory filing, AMC Entertainment CEO Adam Aron has unloaded yet another trove of shares in the movie theater company last week. Aron reported that he sold another tranche of AMC shares worth $7.1 million. And since November, Adam Aron has sold almost $40 million in stock. This could raise investor concerns surrounding the stock’s future performance.

Here’s what could shape AMC’s performance in the near term:

Increasing Competition

Online streaming services have yet again taken over the entertainment space as people avoid crowded theaters amid the resurgence in Covid-19 cases. AMC faces strong competition from online streaming service providers such as Amazon.com, Inc.’s (AMZN) Prime Video and Netflix, Inc. (NFLX). In addition, according to ReportLinker, the global market for OTT Devices and Services is estimated to reach $217.50 billion by 2026, at a CAGR of 18.3%.

Disappointing Financials

AMC’s revenue increased 538.7% year-over-year to $763.2 million for the third quarter ended September 30, 2021. However, its operating loss came in at $145.2 million. Its operating expenses rose 14.3% year-over-year to $908.4 million. The company reported a net loss of $224.2 million, while its loss per share came in at $0.44 over this period.

Weak Profitability

AMC’s trailing-12-months asset turnover ratio of 0.14% is 70% lower than the industry average of 0.46%. Also, its ROC, gross profit margin and net income margin are negative 9.2%, 42.1%, and 137%, respectively. Furthermore, its trailing-12-month cash from operations stood at a negative $1.02 billion compared to the industry average of $360.92 million.

Consensus Rating and Price Target Indicate Potential Downside

Of the four Wall Street analysts who rated AMC, two rated it Sell. The 12-month median price target of $8.17 indicates a 60.3% potential downside. The price targets range from a low of $1.00 to a high of $16.00.

POWR Ratings Reflect Uncertainty

AMC has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. AMC has an F grade for Stability and Sentiment. The stock has a beta of 1.25, which is consistent with the Stability grade. In addition, unfavorable analyst estimates are in sync with the Sentiment grade.

The stock also has a D for Quality which is justified given the company’s weak financials and poor profitability.

Of the nine stocks in the F-rated Entertainment – Movies/Studios industry, AMC is ranked #8.

Beyond what I’ve stated above, you can view AMC ratings for Value, Growth, and Momentum here.

Bottom Line

Although investor optimism surrounding the recent release of the new Spiderman movie and AMC’s meme stock status has helped its shares surge significantly over the past year, the shares are currently trading 71.7% below their 52-week high of $72.62. Furthermore, the stock is currently trading below its 50-day and 200-day moving average of $31.42 and $33.62, respectively, indicating a downtrend. So, we believe the stock is best avoided now.

How Does AMC Entertainment Holdings Inc. (AMC) Stack Up Against its Peers?

AMC has an overall POWR Rating of D, which equates to a Sell rating. While currently there are no stocks in the Entertainment – Movies/Studios industry with an A (Strong Buy) or B (Buy) rating, you might want to consider taking a look at Lions Gate Entertainment (LGF.A), Warner Music Group (WMG), and Imax Corporation (IMAX), which are rated C (Neutral).


AMC shares were trading at $17.94 per share on Tuesday afternoon, down $2.63 (-12.79%). Year-to-date, AMC has declined -34.04%, versus a -3.89% rise in the benchmark S&P 500 index during the same period.


About the Author: Pragya Pandey


Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
AMCGet RatingGet RatingGet Rating
LGF.AGet RatingGet RatingGet Rating
WMGGet RatingGet RatingGet Rating
IMAXGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

3 BIG Reasons Why Stocks Might Finally Be a Buy

The best time to buy is always when you want to least. I believe you should face the fear and embrace the new opportunities provided by the recent mayhem in the S&P 500 (SPY). I'll explore this mindset and how you can apply it to outperform in today's volatile markets below. Read on for more...

:  |  News, Ratings, and Charts

3 Energy Stocks to Buy on the Dip

While most of the market has been mired in a brutal correction, energy stocks have had a very mild pullback. Investors should consider buying a high-quality energy stock like Ovintiv (OVV), Occidental Petroleum (OXY), and VAALCO Energy (EGY) as the underlying fundamentals keep improving.

:  |  News, Ratings, and Charts

Stock Market Moment of Truth

It is clear at this stage that investors want to push stocks (SPY) to the edge of bear market. That 20% sell off from the highs equates to 3,855 where there truly will be a battle for the soul of this market. Is there truly enough belief to push down below into bear market territory. Or will the bullish spirits return given the dramatically better valuation of stocks at this level? Lets discuss those vital topics as well as trading plans for investors in both the bullish and bearish scenarios.

:  |  News, Ratings, and Charts

5 Unstoppable Basic Materials Stocks With More Room to Run

Growing demand for basic materials across industries has been helping companies in this space benefit amid the supply disruptions and rising prices. So, it is wise to bet on quality basic materials stocks LyondellBasell (LYB), Olin (OLN), Chemours Company (CC), Westlake (WLK), and Alpha Metallurgical (AMR), which have gained significantly so far this year and still have plenty of upsides left.

:  |  News, Ratings, and Charts

Stock Market Moment of Truth

It is clear at this stage that investors want to push stocks (SPY) to the edge of bear market. That 20% sell off from the highs equates to 3,855 where there truly will be a battle for the soul of this market. Is there truly enough belief to push down below into bear market territory. Or will the bullish spirits return given the dramatically better valuation of stocks at this level? Lets discuss those vital topics as well as trading plans for investors in both the bullish and bearish scenarios.

Read More Stories

More AMC Entertainment Holdings, Inc. (AMC) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All AMC News