How to Buy AMC Stock
Last Updated: January 11, 2023
Let’s start by defining what a “meme stock” is. After that, the chronological flow of facts will reveal why this is relevant to your query: how to buy AMC stock.
A meme stock is a stock that gains popularity not because of how healthy a company’s financials are but because of hype and how well the asset is propped up on social media and online forums like Reddit.
This trend leads to overvaluation of the quoted stock and sharp price increases within a short period.
So shall we learn more about AMC and what makes such a stock go up or down?.
About the Company
AMC Entertainment Holdings Inc is a theatrical exhibition company headquartered in Leawood, Kansas, United States, and is the world’s largest movie theater chain.
The company was founded over a century ago by Maurice, Edward and Barney Dubinsky. Having traveled across the Midwest performing tent shows and melodramas, the three brothers smelt a business opportunity and purchased their first theater in 1920.
Fast forward to now, AMC operates more than 1,000 theaters and 11,041 screens worldwide which form the cream of its physical capital. Notably, the theater chain has no affiliation with AMC Investments, a firm specializing in real estate.
AMC debuted on the New York Stock Exchange (NYSE) in December 2013, offering AMC entertainment stock to the public at $18 a piece. The IPO price valued the company at $1.7 billion. Interestingly, AMC’s listing on The Big Board was a hard-fought victory following several aborted attempts.
Currently, AMC is the world’s largest film exhibition chain and ranks top of the movie theater stocks to buy list.
Box office admissions are the most significant revenue stream for the company, closely followed by theater food and beverage sales. The corporation also owns AMC Networks which operates AMC, the cable channel. The stock price for AMC is directly influenced by how these revenue channels perform.
Who Owns AMC?
Data shared by Yahoo Finance shows 32.17% of AMC is owned by institutions while insiders own 0.09% of the company’s shares.
Until March 2021, Wanda Group was listed as AMC’s largest shareholder. But the Chinese multinational conglomerate has gradually cut down its ownership to 9.8%, opening the door for other players to buy AMC shares.
Vanguard Total Stock Market Index Fund (2.84%), iShares Russel 2000 (2.32%), and Vanguard Mid-Cap Index Fund (2.26%) are the mutual funds with the largest equity in AMC.
Should You Buy AMC Stock?
Currently, AMC is one of the most popular entertainment investments globally. But before buying AMC stock, you should consider two key factors:
- AMC stock performance
- Your portfolio
Let’s look into each of them to help you make up your mind.
AMC Stock Performance
AMC has expertly navigated testing times as COVID-19 ravaged the film exhibition industry. Faced with the daunting reality of zero profits for the foreseeable future, the company cashed in on the newfound interest in its stock from retail traders in 2021 to raise $587 million and save itself from sinking into the red.
AMC has also been crowned “the king of meme stocks” after scoring unprecedented returns for investors in 2021, defying its reputation of being a volatile investment.
The company is currently refinancing its high-interest debts with a view of stabilizing the AMC stock price and working its way back to profitability heading into the future. The markets have reacted positively to these moves, prompting revisions in AMC stock projections.
When it comes to recent movements, AMC stock rallied following the preview of the company’s preliminary unaudited financial results for the fourth quarter of 2021.
The report teased total revenues of $1.17 billion versus estimates of $1.09 billion and compared to $162.5 million posted the previous quarter. The company also estimated its net loss to be between $194.8 million and $114.8 million.
The markets reacted positively with AMC theaters stock soaring 15%, and analysts now observing it as one of the entertainment stocks to watch.
Questions over AMC’s volatility remain as the company’s 52-week range is pegged at $5.26 – $72.62.
Macroaxis data shows AMC stock has a volatility of 5.81%. Moreover, according to the wealth optimization platform, 49% of all equities and portfolios listed at the NYSE are less risky than AMC.
Analysts have pinned AMC stock price target at $35.10 (high), $10.45 (average), $6 (median), and $1 (low) against a flexible current price. The range is quite wide again.
Price to Earnings Ratio
Organic interest in the company’s shares remains an unlikely prospect as a negative Price to Earnings ratio for the last two years means investors will not be anticipating growth in the company’s earnings in the foreseeable future.
The company posted an actual P/E ratio of -0.95 in 2020 and an estimated P/E ratio of 5.69 in 2021.
A PEG ratio is not applicable for AMC as it currently has negative Earnings Per Share (EPS) while working its way out of the red.
Free Cash Flow
The company hasn’t posted positive Free Cash Flow (FCF) since December 2019. This manifests itself in the firm’s FCF five-year quarterly range.
During the period under review, AMC has posted:
- an FCF minimum of -385.00m (September 2020)
- a maximum of 198.90m (December 2019)
- an average of -110.49m
- a median of -113.40m (March 2019)
This is worrying news for dividend-driven investors as the theater chain will struggle to pursue opportunities that enhance shareholder value.
AMC’s total assets stood at $10.27 billion at the close of 2020, down from $13.7 billion the previous year.
The company’s total assets quarterly range for the past five years has seen:
- a maximum of $13.68 billion (December 2019)
- a minimum of $9.36 billion (September 2018)
- a median of $10.94 billion (March 2021)
- an average of $10.95 billion.
Conversely, over the last 11 years, AMC has recorded a Return on Assets (ROA):
- high of 8.39%
- low of -38.32%
- median of -0.08%
Debt to Equity Ratio
AMC’s Debt to Equity ratio is another potential red flag for investors. It fell into negative territory at the end of the first quarter of 2020 for the first time in seven years, posting a value of -4.694. This shrunk to -3.319 at the end of the third quarter in 2021.
This trend could indicate the high-interest rates on AMC’s debts exceed the Return on Investments (RoI).
Bogged by the pandemic, AMC posted a full-year operating loss of $-4.1 billion in 2020. This was a 3,117.7% decline from 2019 when $0.136 billion was reported as operating income.
The company’s earnings growth has been estimated at 95.80% for Q4 2021, 92.90% for the whole of 2021, 73.90% for 2022, albeit with a more dim view over the long term -217.0% (next five years).
The AMC pre-market performance in 2022 has been shaky. On January 28, the entertainment company matched a 12-day losing streak that ended on January 5, 2022. And as of February 7, 2022, AMC’s pre-market value stood at $15.60.
On the after-hours trading front, AMC has posted a high of $15.49 and a low of $15.33 since the beginning of 2021.
AMC’s last dividends to its shareholders were in March 2020, when the payout was slashed to $0.03 per share. This was down from the regular $0.20 paid out since 2014 and the $1.55 AMC special dividend paid in September 2018.
The AMC stock dividend drop in 2020 was a conservative move, as the company grappled with the closure of cinemas and business uncertainty.
It’s impossible to talk about AMC without bringing up a new trend witnessed in the market in 2021. The entry of a different demographic into the landscape offered a new lease of life to companies that weren’t performing well.
Retail traders flocked the Reddit forum WallStreetBets convincing everyone to acquire meme stocks.
AMC, GameStop, BlackBerry, and Build-a-Bear Workshop stocks were hot cake at a time when hedge funds had shorted these listings hence the moniker “meme stocks.”
“How to buy AMC stock” became a staple for retail traders almost overnight.
The idea was to hold AMC Stock and the other meme listings to create a short squeeze in the market. The result was unprecedented. AMC became more valuable than half the S&P 500 and beat S&P 100 regulars to emerge as one of the top stocks for the year.
The emergence of the retail traders sent the price of AMC stock up 2,230% in June, peaking at $59 a share.
One year earlier, the AMC stock tumbled by more than 70% to $2.12 a share following the outbreak of COVID-19, as captured in the AMC stock chart. This prompted restrictions that kept moviegoers away from the cinemas, worsening the onslaught AMC was already facing from streaming sites.
As the meme stock frenzy has finally fizzled out, deciding whether to hold or sell AMC is not clear-cut as it was one year ago.
The key considerations now are whether AMC adds value to your portfolio and how it compares to other entertainment stocks?
The bottom line is that it’s always wise to spread the risk and allocate your capital across different clusters to minimize the possibility of your basket being exposed to devastating declines.
How to Buy AMC Stock
You might be asking yourself, “should I buy AMC stock, and how can I go about it?”. Well, we will break it down for you.
Before the advent of digital retail channels in stock market trading, tapping a brokerage firm was the only way you could trade stocks.
The entry of online brokers injected a different dynamic into the industry, allowing you to buy and sell stocks at the push of a button at the place of your convenience.
The AMC entertainment stock changes hands on these platforms every split second worldwide.
Directly From AMC
This option is off the table as the company doesn’t offer a direct stock purchase plan.
Online Brokers/ Trading Platform
When seeking to trade AMC stocks via an online broker, the first steps are choosing a platform and opening an account. Online stockbrokers like eToro and Stash Invest are some of the most reputable in the industry.
After registration and identity verification, the next step will be to deposit the funds you will use to trade. Some accounts require a higher minimum balance than others. Hence you will have to find the right fit.
If you are inexperienced in fast-moving markets, some of the challenges you are likely to face include: overinvesting due to being too eager and making investment blunders.
To counter this, brokerage accounts have some key features that come in handy in a scenario such as the AMC buy or sell equation, namely: Market Order, Limit Order, and Stop-Loss Order. These order types protect investors against losing more than they can afford.
Once you are ready to engage, select the AMC ticker symbol — AMC — and place your order.
You can also look at the stockbroker’s other equities, including blue-chip stocks, to sniff out good opportunities.
Should I buy AMC stock? Such a question is the forte of a financial advisor.
A financial advisor will advise you on the state of the market and the merits and demerits of investing in AMC at a particular point in time. They would be aware of AMC stock projections and leverage expert-level research.
Financial advisors can purchase, sell and manage stocks on your behalf as well as minimize the risk by building a portfolio comprising different assets.
Bear in mind that they charge a fee for their services. But hiring a financial advisor is a wise investment, especially if you’re not well versed in capital markets.
AMC is a unique listing. The company enjoyed a good run in 2021, attributable to the recent meme stock mania.
But before you decide to invest in AMC, you should consider a couple of key factors.
First is the onslaught the entertainment company faces from streaming sites. Netflix, Disney Plus, HBO Max, Amazon Prime, and Hulu are pumping millions of dollars into content eating on AMC’s primary market.
Second is the company’s financial performance. AMC is set to post a quarterly net loss for 2021. And while the company’s management is optimistic about its prospects heading into the future, most analysts don’t think the AMC stock ticker symbol is mouthwatering just yet.
We recommend that you keep an eye on AMC stock predictions and conduct your own research before making any move.
The AMC stock symbol is AMC:NYSE, indicating the company is listed on the New York Stock Exchange.
Yes, AMC pays dividends, but the last payout was in March 2020. This is attributable to the effects of the pandemic.
Analysts expect the company to start paying dividends once it has serviced its debts.
The AMC stock market capitalization stood at $7.64 billion in January 2022. But this figure is not cast in stone. AMC’s stock value keeps changing as dictated by market conditions.
AMC’s financial performance hasn’t been stellar, but the emergence of millennial retail traders has boosted the company’s stock. As seen in 2021, this demographic can suddenly prop up the AMC share price. Some analysts predict the momentum would continue and recommend buying into the theater chain.
Researching how to buy AMC stock is vital. But a move can only be recommended when analysis yields evidence to back a purchase. So prospective investors should always run their due diligence before committing their funds.