AMC Stock Is Surging Again. How to Make Sense of the Move.

Barrons2021-06-02

AMC Entertainment‘s skyrocketing stock price would be easy to dismiss as just meme-trade madness, that social media-fueled investor frenzy that has launched the likes of GameStop and BlackBerry into ...

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Comments

Showcase
2021-06-03
Showcase
Nice
- windspring:
  wow
Showcase
2021-06-03
Showcase
Nice if you have brought it earlier
- windspring:
  wow
AdrinaChow
2021-06-03
AdrinaChow
Like and Comment pls
- calistaa:
  so sick
- calistaa:
  sheeesh ??
CL777
2021-06-03
CL777
Amazing run
- Sheryl85:
  yes
Mr. T
2021-06-03
Mr. T
Excellent [Serious]
- calistaa:
  ikr !
Ivychai
2021-06-03
Ivychai
Ok

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How to Make Sense of the Move.\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-02 17:54 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.barrons.com/articles/amc-rockets-higher-is-it-worth-it-maybe-51622594691?mod=hp_LEAD_1><strong>Barrons</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>AMC Entertainment‘s skyrocketing stock price would be easy to dismiss as just meme-trade madness, that social media-fueled investor frenzy that has launched the likes of GameStop and BlackBerry into ...</p>\n\n<a href=\"https://www.barrons.com/articles/amc-rockets-higher-is-it-worth-it-maybe-51622594691?mod=hp_LEAD_1\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AMC","symbol_name":"AMC院线","start_time":0,"source_url":"https://www.barrons.com/articles/amc-rockets-higher-is-it-worth-it-maybe-51622594691?mod=hp_LEAD_1","article_id":"1188552613","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1188552613","pubTimestamp":1622627641,"sourceInfo":{"source_id":"lsy1601382232898","name":"Barrons"},"weMediaInfo":null,"summary":"AMC Entertainment‘s skyrocketing stock price would be easy to dismiss as just meme-trade madness, th","collect":0,"end_time":0,"defaultTopTitle":"barrons.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AMC":"AMC院线"},"translate_title":"AMC股再度大涨。如何理解这一举动。","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMC":0.9},"content_text":"AMC Entertainment‘s skyrocketing stock price would be easy to dismiss as just meme-trade madness, that social media-fueled investor frenzy that has launched the likes of GameStop and BlackBerry into speculative territory.\nBut it’s possible that traditional investors have missed a fundamental change in the movie theater business—and it wouldn’t be the first time.\nShares of AMC (ticker: AMC) surged 23% on Tuesday, closing at $32.04—just off an all-time high of $36.72 set in late May. That puts the movie-theater chain’s market capitalization at roughly $16 billion, more than 15 times what it was in 2018, a record-breaking year at the box office. Shares were up another 34%, to $42.92, in premarket trading Wednesday.\nEven if investors missed an inflection point, though, the math doesn’t add up. The reason might be that market cap isn’t the right measure. Maybe it’s enterprise value, which is essentially market cap and debt. AMC’s enterprise value is about $26 billion, compared with $6.2 billion or so at the end of 2018.\nAMC added debt during the pandemic as theaters in the country’s biggest cities were dark for months. And the numbers make it easy to understand why: The U.S. box office in 2020 generated about $2.1 billion in ticket sales, down 81% from the 2018 record of $11.9 billion.\nSo, it seems investors have been vexed by movie theater economics. But it wouldn’t be the first time. The industry essentially went belly up at the turn of the millennium. 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Something new has to be different for AMC to be worth it.\nMaybe the movie theater business is going to go through another period of consolidation, which can usher in another golden age of returns. AMC’s Tuesday gains, in fact, were catalyzed by new capital raised so the company could go on the offensive, acquiring defunct chains. Monopolies, after all, can be good for stock returns.\nIf AMC can increase market share and the U.S. box office sales can return to 2018 levels in a few years, total sales at might be $9 billion—$6 billion from tickets and $3 billion from concessions. Sales in 2018 amounted to $5.5 billion.\nThen, with better gross profit margins derived from larger scale, AMC might be able to generate $600 million in free cash flow annually, which puts the stock at about a 4% free cash flow yield. The S&P 500 trades for about a 3% free cash flow yield. The numbers can work—if they’re stretched.\nThere are problems with this scenario, though. There are lots of ifs and mights—and AMC has never generated cash flow like that in the past. Arriving at $600 million in free cash flow is more about justifying current valuations than predicting what is likely.\nAlso, with mergers and acquisitions, AMC market shares might rise, but there are still competitors. Regal Cinemas is still out there, owned by Cineworld Holdings (CINE. London). So is Cinemark (CNK). There’s not a true monopoly.\nAMC and its peers have to deal with streaming, too. Windows for exclusive theater showings are shrinking. The pandemic has accelerated that. And if AMC gets too large and demanding for movie makers, the talent can always go to streaming faster, hurting box office sales.\nThere is also the problem of the peer stocks. They aren’t trading like this is a brave new world for theaters. Cineworld stock is up 484% from its 52-week low, but shares are still off 72% from all-time highs. Cinemark shares are up 222% from their 52-week low. They are down 47% from their all-time high.\nAMC stock, again, is up almost 1,600% from its 52-week low and is down just 13% from its May all-time high.\nWall Street just doesn’t see the potential either. Nine analysts cover the stock. The average analyst price target is about $5. Before the pandemic, the average analyst price target was $15. But there were fewer shares back then. The old target enterprise value was roughly $7 billion. It’s tough to get from $7 billion to $26 billion predicting better margins.\nAnalysts do have positive free cash flow modeled, though–$13 million in 2022 and $90 million in 2023. That’s a long way from $600 million.\nAnd that’s just another way of saying that AMC bulls are a long way from making the math 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and Comment pls","listText":"Like and Comment pls","text":"Like and Comment pls","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/111685680","repostId":1188552613,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":4555845,"gmtCreate":1622686113548,"gmtModify":1663227843263,"authorId":3579600991288921,"author":{"id":3579600991288921,"idStr":"3579600991288921","authorId":3579600991288921,"name":"calistaa","avatar":"https://static.tigerbbs.com/db19813ce8d11bd26aa6841b1cbe2d1a","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":111685680,"type":1,"supId":4555791,"prevId":0,"content":"so sick","text":"so sick","html":"so 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