Another Victory For Retail Traders As AMC Price Blasts Off

AMC follows GME to the heavens as retail traders flex their muscles while pushing institutional-level players to the sidelines.  It is a true David vs. Goliath story where the impossible is possible.

To The Moon?  Maybe?  But What About The Landing?

We’ll start off with this 10 Minute AMC chart that shows two incredible rallies over the past 72 hours.  The first, a +42% rally from $32 to $45, and the second, a +65% rally from $36 to $62 as day traders and retail traders drove AMC to incredible highs (over 100% higher) in just 3 days.

What is happening with these price swings is that a group of retail and other traders are piling into a selected symbol and attempting to force a short squeeze in larger institutional level accounts.  As the price moves higher, big money often comes in to short these symbols if fundamentals and earnings don’t support the valuation.  Yet, when the tide of retail buyers is never-ending and they lock up their shares with sell limit orders well above the current market price, this locks out the shorts (in some form) – pushing the squeeze into hyperdrive.

YOLO! Blow Up? Blow Out? Who’s Left Holding The Empty Bag?

The Daily AMC chart below shows the incredible +560% rally that has taken place in under 30 days.  Just like what we saw with GME, this rally has moved into a parabolic phase with price levels now well above $45 to $55 per share.  When you consider AMC was trading below $8.00 per share just 4 months ago and is just now starting to regain some revenue after opening in theaters in many states, one has to ask a simple question…  Who’s left holding the bag when this is all over?

I remember seeing the posts on Reddit from retail traders that had lost fortunes after the GME rally collapsed.  I remember reading about that one young man that took his own life after amassing a +$700k margin debt on Robinhood.  As much as one has to sit back and wonder in amazement at this rally in AMC – I keep asking myself “who’s going to walk away from this holding a huge loss when this is all over?”.

Maybe that is the YOLO plan for many of these traders.  It is not about wealth preservation or consistently trying to find suitable gains in a wild market.  Maybe it is about living the experience – no matter what the costs and risks are.

I congratulate those retail traders involved in this rally and we hope to urge you to take your profits and be satisfied with these incredible rallies.  There is nothing wrong with pulling off enough to cover your initial investment (or more) when you want the symbol to skyrocket like AMC has.

Additionally, I urge all active traders to consider the longer-term game plan when you start to get serious about trading and investing.  My team and I like the “slow and easy” approach to trading where we target momentum-based trends while the markets support rising price levels, use position-sizing to our advantage, and attempt to limit downside risks.  In our opinion, staying alive and protecting our trading account is more important than these “flash-rallies” and the risks that come with this style of trading.

We’ve all heard stories about the traders that turned $2500 into $250k, then lost it all on a couple of dumb trades.  That is a very important lesson to learn in this industry.  Especially when data shows that more than 60% of active traders blow out their accounts within three years of trading.

Having said that, our options trading specialist has unique and fresh ways to play price and volatility spike in AMC shares. Watch this video for some ideas.

Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

Enjoy the rest of your day!

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

WallStreetBets Does Victory Lap as AMC Crosses USD 40

Shares of AMC Entertainment have reached a second milestone in as many weeks, surpassing the USD 40 level after more than doubling to USD 30 a week ago. Mudrick Capital just bought 8.5 million shares of AMC only to turn around, deem them “overvalued” and dump them right after, according to the latest reports. Investors are piling in the stock anyway, sending a signal to the investment firm that its muscle isn’t needed.

The Wall Street Bets forum on Reddit, which is responsible for rallying individual investors around AMC and other highly shorted stocks in a move to upend sophisticated traders, is filled with members celebrating and spreading their share of FOMO. They are urging each other to get in before the price goes to USD 100. Considering the stock is already up 2,000% this year, that would be an amazing run-up though it’s unclear how sustainable that would be. The nearest precedent is GameStop, whose shares have advanced roughly 1,400% YTD thanks to the same WallStreetBets effect.

Options Activity

Meanwhile, Market Rebellion, which is run by brother traders Jon and Pete Najarian, tweeted that there was some “bearish” and “unusual activity” in AMC stock, with “7,000 June USD 31 puts bought in one print for USD 5.55 above open interest of 1,313 contracts.” Either that options trader knows something that the market doesn’t or they are about to fuel more gains in the stock. Bearish moves like this seem to unite the meme-stock crowd even more, which continues to ride the AMC wave for all its worth. So far, there are 1.35 million AMC contracts traded, 64% of which are calls and the balance of which are puts, according to Roensch Capital, which the firm described as “bull heavy.”

BB Bandwagon

On the flip side, call prices in Blackberry, another stock that Reddit members on the WallStreetBets platform are targeting, are on the rise today. Last Friday, Market Rebellion found that “5,000 weekly USD 10 calls expiring this Friday, Jun. 4, were bought for USD 0.11 to USD 0.31 above open interest of just 1,152 contracts with shares at USD 8.77.” Now those calls are trying higher by USD 3.25, more than 10x the purchase price, while the stock is up 10%.

WallStreetBets is getting expensive for some short-sellers to tango with.

For a look at all of today’s economic events, check out our economic calendar.

Amc Courts Reddit Crowd Again After Hedge Fund Share Deal

By Aaron Saldanha and Devik Jain

Mudrick Capital Management bought 8.5 million new AMC shares for $230 million on Tuesday before later selling them at a profit, according to a source, a bold move by the fund and the company to cash in on the retail-driven surge in its stock.

Other institutional traders continued to pour scorn on rises in so-called “meme stocks”, which also include GameStop Corp and BlackBerry Ltd, but shares in all three continued to gain in trading before the bell.

“It’s not rational, but do not bet against it,” said a Berlin-based trader.

AMC has been among the biggest gainers from a vigorous market battle since January involving both hedge funds and a new generation of social media centric small-time traders.

On Wednesday, the company launched a new scheme that offered even the smallest investor a free large popcorn if they signed up to a regular newsletter.

“Even if our shareholders now number in the millions … these people are the owners of AMC, and I work for them,” Chief Executive Officer Adam Aron said.

AMC’s stock has surged more than 1,400% this year and, at nearly $40, is trading at more than 10 times the median analyst price target.

The number of messages related to AMC on trading-focused social media site Stocktwits rose more than 7% on Wednesday, with most of them reflecting a positive sentiment.

Daily trading volumes in AMC have reached their highest since January in the past week, according to Refinitiv Eikon, while data from Fidelity showed it was the platform’s most traded share.

GameStop was up 1% in premarket trading, while Koss Corp jumped 7%. BlackBerry’s U.S.-listed shares were last up 17%, bringing their total yearly gains to more than 75%.

(Reporting by Sagarika Jaisinghani, Aaron Saldanha and Devik Jain in Bengaluru and Thyagaraju Adinarayan in London; Editing by Sriraj Kalluvila, Shounak Dasgupta and Patrick Graham)

Goldman Downgrades Imax to ‘Sell’

Goldman Sachs downgraded theater chains Imax Corp. (IMAX) and Cinemark Holdings Inc. (CNK) to ‘Sell’ on Wednesday, just one day after momentum favorite AMC Entertainment Inc. (AMC) soared 22% to an all-time high. Speculators scooped up shares after the company raised $290 million in cash in a sale to a hedge fund, securing their 2021 financial position. A great weekend box office underpinned the rally as well, with some receipts returning to 2019 levels.

Speculative Interest Dries Up

Imax held up better than Cinemark during the crisis, with a few brave souls focusing limited entertainment dollars on big budget productions. The chains continued to attract strong speculative interest heading into 2021 but upticks stalled in the first quarter due to valuation concerns. Imax lifted into a stronger technical position during the rally, completing a 100% retracement into horizontal 2017, 2018, and 2019 highs in the mid-20s.

Goldman analyst Michael Ng offered mixed commentary with the ratings, noting “Although there’s been a secular decline in movie-going, attendance declines are happening at a very slow place, declining 1.4% CAGR from the 2002 attendance peak to 2019. In fact, the box office has grown at 1.3% CAGR over that same time period as increased ticket prices have more than offset attendance declines. That said, we believe the closures of theaters during the pandemic may have accelerated the secular decline in attendance.”

Wall Street and Technical Outlook

Wall Street consensus on Imax now stands at an ‘Overweight’ rating, based upon 7 ‘Buy’, 2 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $18.60 to a Street-high $30 while the stock will open Wednesday’s session just $3 above the low target. This weak placement suggests that Main Street investors generally agree with Goldman that movie stocks won’t offer strong returns for the rest of 2021.

Imax posted an all-time high at 43.80 in 2015 and turned sharply lower, dropping to an 11-year low in March 2020. It recovered at a steady pace into March 2021 when the stock reversed within two points of resistance in the mid-20s and fell six points.  Price action since that time has been stuck in a trading range with support at 20 while accumulation has held just below the first quarter peak. A positive catalyst could save the day with this configuration, breaking the resistance and lifting price into the 30s.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

WallStreetBets Emboldens AMC Despite Long-Term Uphill Battle

After taking a breather on Friday, AMC Entertainment and GameStop are both seeing double-digit percentage gains as investors return for more.

AMC has shot back above the psychologically significant USD 30 level, rising 20% on the day, while GameStop has added more than 10% to USD 244. After AMC’s stock more than doubled last week on robust volume, it has proven that there is more runway for gains.

AMC Flexing Its Muscle

The movie chain is seemingly emboldened by being the object of WallStreetBets’ affection and is flexing its muscle. AMC has attracted USD 235.5 million to its coffers in equity thanks to Mudrick Capital Management, which is buying 8.5 million shares.

Despite getting the brunt of the pandemic-fueled lockdowns, AMC sees brighter days ahead and plans to direct the proceeds from the stock sale toward making acquisitions, remodeling its movie theaters and strengthening its balance sheet. AMC CEO Adam Aron said in an SEC filing that the company is back on the offensive now that the population is getting vaccinated and “blockbuster new movie titles” are in the pipeline. If last weekend was any indication, Aron could be onto something. “A Quiet Place Part II” is expected to have generated USD 58.5 million in movie ticket sales compared to “Cruella’s” USD 26.5 million. Not everyone is impressed, however.

Bucking the Trend

An analyst at one Wall Street firm, Loop Capital, isn’t believing the hype. Loop’s Alan Gould has reiterated his sell rating on AMC, saying “the stock does not reflect fundamental value.” He has a USD 1 price target on the stock and points to “steadily declining” attendance at movie theaters since the turn of the century.

For the long term, movie stocks can trade at 7.5 forward EV to EBITDA on average, Gould explained. He said if AMC chief Aron were to issue 100 million shares at the current price, Loop’s USD 1 target would only increase to USD 5. He doesn’t fault CEO Adam Aron for riding the wave and issuing shares at the current price, however, noting that the number of shares it has left to sell is dwindling.

For a look at all of today’s economic events, check out our economic calendar.

AMC’s Stock is up by 17% as Company Sold More Shares

AMC Entertainment’s stock price surged today at pre-market trading as the company sold more than 8 million of its shares to investors. Despite the company’s stock price rising, the latest move further shows that AMC’s struggles are far from over.

AMC’s stock soars by 17%

The shares of theater chain AMC surged by roughly 17% earlier today, crossing the $30 mark at Tuesday’s pre-market trading session. The company’s stock price went up after it sold over 8 million shares to Mudrick Capital Management, raising $230.5 million in the process.

According to the company, the funds would be used for potential acquisitions, upgrading its theaters and reduce its financial leverage. Hence, allowing it to reduce its debt. CEO and President Adam Aron said raising millions of dollars is a positive result for the company’s shareholders.

AMC’s business hit by the pandemic, turned to a meme stock

The company’s business was hit by the Coronavirus pandemic as theaters in the United States and other parts of the world shut down for most of last year. AMC’s stock became a meme stock, with traders on Reddit pushing its price up by 1000% since the start of the year.

Despite the positives, AMC Entertainment still has a lot to deal with. The company has roughly $5 billion in debt and had to postpone $450 million in lease repayments due to the decline in revenue over the past year.

According to the AMC’s securities filing, its market cap on Friday, May 28, was $11.8 billion. The company said its valuation doesn’t accurately reflect AMC’s financial performance or prospects. Rather, it reflects t trading dynamics based solely on market volatility. AMC warned that traders who buy their Class A common stock could record losses if there is a decline in market prices due to a return to earlier valuations.

Per its statement, AMC believes that its stock price could dip as the Reddit traders pushing it higher might not do so for the long run. However, the CEO said that with the additional liquidity, increase in people vaccinated, and the imminent release of blockbuster new movie titles, AMC will go on the offense again.

AMC Investors Show Steady Hands, Call Hedge Funds’ Bluff

The WallStreetBets forum on Reddit is filled with conspiracy theories and victory laps as AMC Entertainment oscillates between positive and negative ground. After touching on USD 36 yesterday, AMC shares remain below the USD 30 threshold today, but the recent pullback appears to only be emboldening retail investors. The stock is up approximately 100% this week alone even after falling as much as 5% in earlier trading today.

Steady Hands

According to the Reddit thread and Twitter, AML investors were not caught unaware by today’s selling. They have been saying since Thursday’s rally that hedge funds are strategizing to take on the little guy, seemingly planning to sell AMC shares in an attempt to shake off any weak hands and avoid an eventual short squeeze. You can’t really blame them.

According to financial analytics firm Ortex, borrowing in AMC is on the rise as short interest climbs nearly 3% to 17.87% of the free float. A Twitter account with the username @daylightScott was one of many people to call the sophisticated traders out, saying that the hedge funds are selling to stop the bleeding and that they are using it as a “scare tactic.”

Taunting Traders

Nonetheless, retail investors proved to have steady hands. One Reddit member with the username “AntsOnTheMoon” antagonized the hedge fund traders, asking, “Is that all you hedge funds got?” This investor took the dip as a buying opportunity, saying, “Drop the price lower, I want to buy more please.”

Source: Twitter

This appears to be the battle cry of many retail investors in the movie chain’s stock. Instead of backing down, they are sharing the size of their AMC bags and reminiscing about the sudden volatility in GameStop shares this year. This is not the short squeeze they are waiting for, and that is why there is not a lot of panic selling going on, to the dismay of the short sellers.

AMC trading volume is also through the roof, with over 516 million shares changing hands and more than USD 13 billion traded, surpassing even Tesla.

For a look at all of today’s economic events, check out our economic calendar.

Why AMC Entertainment Stock Rallied Again

AMC Video 28.05.21.

“Meme Stock” Rally Continues

Shares of the theater operator AMC Entertainment gained additional upside momentum and moved to new highs as the rally in “meme stocks” continued.

Beyond Meat stock gained some ground today, while GameStop shares opened higher but moved below yesterday’s close as traders decided to take some profits off the table.

It looks that there are still many short positions in AMC Entertainment, and retail traders managed to orchestate a major short squeeze. The stock traded near the $2.00 level at the beginning of this year and has recently managed to touch highs at $36.72, so such a move may continue to attract short sellers that are willing to bet that retail traders’ activity will cool down and the stock will move back to more reasonable levels.

What’s Next For AMC Entertainment Stock?

Analysts expect that AMC Entertainment will report a loss of $3.29 per share in 2021 and $0.85 per share in 2022. While the reopening of the economy will surely provide support to the company’s business, AMC Entertainment is nowhere near profitability in the near term.

There is no fundamental reason for the meteoric rise of the company’s stock, but fundamentals will not matter as long as AMC Entertainment stays popular on WallStreetBets and other social media forums.

I’d note that there is a big difference with the recent rally in GameStop shares as AMC Entertainment stock is moving higher on solid trading volume which resembles the volume that was seen back when the stock enjoyed strong rally in late January. In GameStop case, the trading volume is well below the levels that were seen in January – March of this year.

The high trading volume indicates that there is a lot of speculative interest in the stock, and AMC Entertainment shares will remain highly volatile in the upcoming trading sessions. Traders should be prepared for very fast moves and keep in mind that the company’s current valuation is completely detached from fundamentals.

For a look at all of today’s economic events, check out our economic calendar.

Wall Street Bets: Redditors Scoop Up More AMC as Buy List Grows

Retail investors led by Reddit forum WallStreetBets continue to drive up the price of movie chain AMC Entertainment, with the stock tacking on another 19% today. Investors are so committed to the company that they are talking about going back to the movies and splurging for popcorn when AMC shares hit USD 30. They just might get their wish.

Slot Machine Gains

Investors are comparing AMC to “sitting at a slot machine in Vegas,” and by the looks of it they are not too far off. They are continuing to buy even as the price continues to rise while setting their sights on lambos and holding on for dear life. It is a perfect storm of sorts where hedge funds are buying AMC shares to cover their short positions and institutional investors are reporting jumping on the bandwagon to ride the wave.

Meanwhile, short seller losses are mounting, reaching USD 1.8 billion in recent days across GameStop, AMC and Virgin Galactic, according to CNBC. So far this year, USD 6.7 billion has been wiped away from short-sellers in GameStop.

Not the Only Short Game in Town

While AMC and GameStop are two of the most popular stocks on the radar of WallStreetBets, they are not the only short game in town. Another post on the WallStreetBets forum is shining the spotlight on UWM Holdings, the parent company of United Wholesale Mortgage. The stock is up nearly 4% today and according to the Redditors there are some catalysts floating around.

Short interest in UWMC is said to be 22%, which incidentally is higher than that of AMC and Gamestop, at 21% and 17%, respectively. In addition, the company announced in its Q1 earnings report that it is repurchasing as much as USD 300 million in shares in the next two years, starting this month. Today the stock was in the pipeline to be added to the MSCI Global Small Cap Index. With a market cap of USD 14 billion, Wall Street Bets suggested that it could make its way to the index’s top 10 rankings.

Meanwhile, the meme stocks are also on the radar of Bank of America analysts, who believe the Reddit trend could be here to stay thanks to the rise of zero-commission trading platforms, more idle time and higher balances in savings accounts.

For a look at all of today’s economic events, check out our economic calendar.

‘Meme Stocks’ Extend Grip on Wall Street as GME, AMC Take Off

They’ve earned the name as ‘meme stocks’ given their ability to trade on social media sentiment rather than the bottom line. And while there might be something whimsical about them, the two most popular meme stocks — GameStop and AMC Entertainment — are generating some serious returns of late. In addition, even though it doesn’t belong in the same asset class, bitcoin is also getting lumped into the meme category by some analysts for its non-conventional features.

GameStop and AMC are each advancing by double-digit percentages today, up 16.5% and 18.7%, respectively. Today’s gains bring the tallies for the week to 36% for Gamestop and 43% for AMC shares. Gamestop shares are up more than 1,200 % year-to-date, while AMC’s stock has risen over 800%. Could there be more room to run? Retail investors are betting on it.

Over in crypto land, the bitcoin price is continuing on its path to recovery after last week’s 40%-plus decline where it managed to hold above the USD 30K threshold. BTC is on the brink of crossing the psychologically important USD 40K level once again.

Anecdotal Evidence

Sanctuary Wealth portfolio manager and CIO Jeff Kilburg is quoted by CNBC as saying that the rebound in the meme stocks is being fueled by “oversold conditions” in these names as they fell in sympathy with bitcoin’s recent drop, as well as some good old fashioned profit taking.

Meanwhile, the WallStreetBets forum on Reddit has been spearheading the buying in the stock market’s most shorted stocks since the beginning of the year. Reddit members’ attention, however, is reportedly starting to shift from equities to cryptocurrencies, based on anecdotal evidence tied to comment volumes.

The Financial Times reported that Quiver Quantitative, a research firm, found that the number of comments on the r/Cryptocurrency subreddit increased 82% in the first three weeks of May vs. a 42% decline on the WallStreetBets forum. That trend might have had something to do with the Elon Musk effect on bitcoin.

Source: The Financial Times

Short Interest

Short sellers couldn’t care less what anecdotal evidence says, as they are losing money. According to S3 Partners cited by CNBC, traders have been covering their short positions on GameStop to stop the bleeding. They have suffered mark-to-market losses in the stock of USD 6.5 billion year-to-date, S3 says. And while the average short-seller position in the United States is just 5%, this metric rises to more than 20% when you are talking about meme stocks GameStop and AMC. Meme stocks, for their part, are proving to be a force to be reckoned with.

For a look at all of today’s economic events, check out our economic calendar.

AMC Entertainment Stock Finds a Tailwind Even as Big Investor Cashes In

AMC Entertainment (AMC) shares came out of the gate strong today, giving Redditors cause to celebrate even as the company’s biggest shareholder, Dalian Wanda Group, ran for the exits last week. Famous Reddit forum WallStreetBets has led the rally in the AMC stock price this year as the group of individual investors looks to turn the tables on short-selling hedge funds and leave them holding the bag in the interim — just as they did with GameStop (GME) stock.

While Reddit investors’ risky gambit continues to play out in their favor, short-sellers are feeling the pain for a change. AMC is one of the three most shorted stocks alongside GME and Virgin Galactic (SPCE), all of which are trading in the green today. Short-sellers are at risk of losing close to USD 400 million across this trio of stocks as a result of today’s activity alone, as per financial analytics firm Ortex.

Source: TradingView

Exit Sign

In recent days, China’s Dalian Wanda Group unloaded most of its stake in AMC, according to a U.S. SEC filing, cashing in on its holdings to the tune of nearly USD 430 million. Dalian, which purchased the movie chain in 2012 and had reportedly been looking for a way out since the pandemic, benefited from Reddit’s AMC fever. While it still owns 10,000 AMC shares, it could no longer sit on the sidelines after the movie chain’s stock soared 580% year-to-date.

AMC investors are celebrating the fact that Dalian Wanda finally pulled the plug, saying that the investor had been a thorn in their side anyway.

Source: Twitter

Billboard Push

AMC has also received a tailwind after making it onto a number of Las Vegas billboards thanks to a funding effort led by the community that has raised more than USD 18,000 of its USD 25,000 funding goal so far. The marketing blitz, which also includes plane advertising, is targeting New York next.

Source: Reddit

While the AMC drama has some more time to play out, individual investors appear to have figured out a way to level the playing field with short-sellers that have been known to quash stocks down to being worth nothing. Whatever happens next with AMC’s stock, one thing is clear — individual investors have changed the game on Wall Street for institutions that once made all the rules.

For a look at all of today’s economic events, check out our economic calendar.

Buffett and Munger Heap Criticism on Robinhood for Casino-Like Atmosphere

By Jonathan Stempel and John McCrank

Speaking at Berkshire Hathaway Inc’s annual meeting, Buffett said Robinhood has attracted, “maybe set out to attract,” a large number of people who are just gambling on short-term price movements in stocks such as Apple Inc.

“There is nothing illegal to it, there’s nothing immoral, but I don’t think you build a society around people doing it,” he said.

Buffett’s long-time business partner, Charlie Munger, was more harsh.

“It’s just god-awful that something like that would draw investment from civilized man and decent citizens,” he said. “It’s deeply wrong. We don’t want to make our money selling things that are bad for people.”

Buffett said that while the odds of profiting from day trading stocks and derivatives are better than playing the state lottery, many new investors would have better results buying and holding shares of good companies.

“The gambling impulse is very strong in people worldwide and occasionally it gets an enormous shove,” Buffett said. “It creates its own reality for a while, and nobody tells you when the clock is going to strike 12 and it all turns to pumpkins and mice,” he said.

Some critics have said free trading platforms can encourage millennials to view trading as a game or amusement.

Brokers like Robinhood Financial have attracted controversy this year as traders drove huge rallies in shares of video game retailer GameStop Corp, movie theater chain AMC Entertainment Holdings Inc and other companies despite no fundamental reason for the frenzy.

Some of the buying was fueled by chats on forums like Reddit’s WallStreetBets to ostensibly to punish hedge funds that had bet against so-called meme stocks.

Robinhood faces many lawsuits over its decision in January to curb trading in GameStop and other stocks, and Massachusetts is seeking to revoke its broker-dealer license.

(Reporting by John McCrank and Jonathan Stempel in New York; Editing by Cynthia Osterman)

AMC Entertainment Upgrade Signals Better Times Ahead

U.S. movie chain AMC Entertainment Inc. (AMC) is trading higher in Monday’s pre-market after B. Riley Securities upgraded the stock from ‘Neutral’ to ‘Buy’ with a Street-high $13 price target. The news comes just days after the Centers for Disease Control (CDC) gave the OK for fully-vaccinated Americans to resume air and railroad travel without prior testing due to low odds for contracting or transmitting the COVID-19 virus.

‘Godzilla vs. Kong’ Roars at the Box Office

The timing couldn’t be better, at least from Hollywood’s viewpoint. “Godzilla vs. Kong” just posted the strongest box office of any movie release since March 2020, earning an estimated $48.5 million at 3,064 cinemas between Wednesday and Sunday. The film was also released on the HBOMax streaming service, making in-person attendance figures even more impressive.  Imax Corp (IMAX) also reported a strong opening at its high tech theaters, earning $4.5 million on 284 screens.

However, Riley analyst Eric Wold also expressed caution due to the company’s high debt load, which was incurred to avoid bankruptcy, noting “Our only concern and reason for the prior Neutral rating had been the high levels of debt on the balance sheet and the strain this could place on future cash flows. However, with management increasingly signaling the ability and willingness to utilize equity to reduce the debt load, we can now be more constructive on the upside opportunity for the shares.”

Wall Street and Technical Outlook

Wall Street consensus remains skeptical despite growing optimism about the post-pandemic world, with an ‘Underweight’ rating based upon 1 ‘Buy’, 5 ‘Hold’, and 4 ‘Sell’ recommendations. Price targets currently range from a low of $1.00 to a Street-high $13.00 while the stock is set to open Monday’s session nearly $3 above the median $7.00 target. This high placement tells us that Main Street is more optimistic about AMC’s long-term outlook than market insiders.

The stock topped out at 36.13 in 2015 and entered a steep decline, driven by the relentless rise of streaming-video-on-demand (SVOD). It fell to 1.95 during March 2020’s pandemic decline and bounced above 7.00 during the summer months. Bears took control once again in the first half of winter’s second wave, with price finding support just four cents below the prior low in January. The subsequent bounce has completed a double bottom reversal that confirms the first uptrend in six years.

For a look at all of this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

AMC Entertainment Projects Most Cinemas to Reopen by March 26 – Shares Pop

AMC Entertainment Holdings, Inc. (AMC) shares added to Wednesday’s gains in extended-hours trade after the movie theater operator said that most of its U.S. cinemas will reopen by March 26. The announcement comes just hours after the Walt Disney Company (DIS) said it plans to open its California theme parks to a limited capacity on April 30.

Throughout the pandemic, movie theater chains have not only had to contend with shutting cinemas but also with filmmakers moving releases to video on demand or streaming services. During the fourth quarter, Disney decided to move its highly anticipated film “Soul,” produced through its Pixar animation studio, to its streaming service, Disney+.

However, in a much-needed boost for cinemas, the reopening of AMC theaters coincides with the release of the latest James Bond movie “No Time To Die,” which hits the big screen on April 2. The maker of Bond films – EON Productions Limited – delayed the release date several times over the past year to allow the film to be seen by a worldwide theatrical audience.

Through Wednesday’s close, AMC stock has a market capitalization of $6.81 billion and trades 539% higher since the start of the year – in part, due to a social media-induced speculation rally. In the past five days alone, the shares have gained nearly 40%.

Wall Street View

Riley Securities analyst Eric Wold raised the firm’s price target on AMC Entertainment to $7 from $5.50 and kept his ‘Neutral’ rating on the stock. Wold told investors in a research note that the company’s fourth-quarter sales came in ahead of expectations thanks to a stronger than anticipated performance at theaters and ongoing expense controls. The analyst also believes the movie operator sits well positioned to benefit from a box office rebound in 2022.

Coverage elsewhere on Wall Street remains thin, given the stock’s recent volatility. It currently receives five ‘Hold’ ratings and four ‘Sell’ ratings. Price targets range from a high of $7 to a low of just $1, with the average target pegged at $3.44.

Technical Outlook and Trading Tactics

AMC shares broke above an extended downtrend line in late January, rocketing up to $20.36 on social media trading speculation. However, the rally was short-lived, with the price subsequently retracing back to the downtrend line. More recently, the stock flipped resistance into support at that level and has continued to trend sharply higher.

Active traders who want to play short-term momentum should target a move back to the all-time high (ATH) while managing risk with a stop-loss order placed under the March 15 low at $11.85. Longer-term investors should look to buy the stock near an uptrend line connecting the January and February swing lows.

For a look at today’s earnings schedule, check out our earnings calendar.