Some people believe Tesla’s valuation makes no sense, but there is a leader and a vision and corporate culture there that make it possible to think they could become the biggest company in the world. “From a valuation standpoint, it makes no sense. “This cannot last forever,” says Chad Beynon, an analyst with Macquarie. Yet AMC is trading like a tech stock, not a business that makes its money by up-charging customers on popcorn. Many believe that the theatrical marketplace will recover from the pandemic-era shutdowns, particularly with Hollywood studios again releasing blockbusters like “A Quiet Place Part II” and “F9.” But they also argue that the exhibition industry is a mature business, whose revenues rise or fall by a percentage point or two annually. “There’s nothing rational with the way AMC’s stock is trading.”Īnalysts like Handler believe that AMC’s shares should be trading at $5 to $10 a share and note that the company’s previous high of $35 per share was achieved in 2018 during a record-breaking year for the box office. “I’ve been doing this for over 20 years, and I’ve never seen such a retail-fueled frenzy in the stock market before,” says Eric Handler, an analyst with MKM Partners. AMC also has $450 million in deferred leases, and most analysts believe it won’t be cash-flow positive for at least another year. Yet the company is still burning cash at a rate of more than $100 million a month and is heavily leveraged, with more than $5 billion in debt on its balance sheet. “I spend every waking moment trying to make AMC a stronger company, so the people who bet with us are the ones who succeed.” “It just really annoys me to no end that people bet against us,” he said. And without endorsing any particular stock price, he said it would be a mistake to root against the company. In the interview, he said he had started following “1,000 apes” on Twitter - referring to Reddit investors - because he wanted to stay in touch with investor sentiment. On June 3, the cinema circuit’s CEO appeared on “Trey’s Trades,” a YouTube show for retail investors. … The warnings do nothing except feed the frenzy of the fake news.”Īnd AMC chief Adam Aron has sometimes encouraged the Reddit crowd. “It may be volatile, but it’s going to swing back up again because it has to. ![]() “This is an army behind this,” says Jessica Thalls Rivera, 31, a spokesmodel from Las Vegas, who is hoping that her AMC investment will help her put a down payment on a house. That did nothing to dampen the frenzy - indeed, the stock price more than doubled after the warning before dropping sharply and then shooting up again. But on June 1, the company issued an extraordinary warning to its investors, advising that AMC’s valuation had become detached from reality, and that retail investors risked incurring “substantial losses.”
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