AMC Will Not Collapse

By Douglas A. McIntyre Published Jan 20, 7:30AM EST

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AMC Will Not Collapse — © Pgiam / E+ via Getty Images

Despite every effort by the well-intentioned who want investors to see how dim its prospects are, shares in AMC Entertainment Holdings Inc. (NYSE: AMC) will not die. After a series of gyrations, its shares have risen from below $4 to above $6 in a week. Nevertheless, the stock is still down 70% over the past year. (Click here for the companies that control over 50% of their industry.)
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AMC is caught by what is known as creative destruction. An old model is overwhelmed by a new and presumably better one. AMC is in the movie theater business. Fewer and fewer people go to movie theaters. COVID-19 accelerated this. Streaming media ensured it.
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While the end is in sight, sometimes there is a bit of hope. The success of “Top Gun: Maverick” was because many people wanted to see it on the big screen. Actor Tom Cruise said it was the only way viewers could do his work justice. For every “Top Gun,” there are 20 movies made by Amazon, Apple, Netflix, Hulu and HBO that never debut outside people’s living rooms.
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AMC management has a gift for raising money, but that is not enough to unseal the company’s difficult future. AMC lost $226 million in the most recent quarter. Management said it was because demand was soft. There were not enough blockbusters. The fourth-quarter blockbuster season would reverse that. However, blockbusters on streaming services are released more frequently.
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Another problem that stands in the way of an AMC recovery is the COVID-19 pandemic. It will not go away, especially when the weather is cold. Hundreds of people die from the disease every day. The public is repeatedly warned that crowded areas are a danger.

AMC does not have a bright future, but some investors refuse to give up. That is a mistake.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.