The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. On the date of publication, Josh Enomoto held a LONG position in AMC. When you do, it’s possible that you’ll have a less-than-boisterous attitude toward the cineplex operator and its ilk. Whether you love memes or not, I think it’s time to think critically and logically about this “investment” class. Well, it looks like it’s not delivering so in hindsight, I should have exited AMC completely. Because of the meme phenomenon, I was able to exit my previously upside position profitably, but I kept some in there in case the meme continued to deliver. Think Logically With These MemesĪs you’ll read below, I own shares of AMC stock so let me explain the contradiction. When you compare the year-over-year growth in average hourly earnings versus the year-over-year growth in the consumer price index, you’ll quickly recognize that unless the monetary equation changes dramatically, inflation (and the associated rise of costs of living) will make our so-called economic recovery unsustainable. Combine that with declining purchasing power, AMC is looking rather fraught. What’s worse, other entertainment options - most conspicuously the return of live sports - have normalized, imposing more competition on AMC stock. Meaning, if a household ordinarily budgeted for both a night at the box office and dinner at a fancy restaurant, they may have to choose. You see, with the purchasing power of the dollar declining rapidly, consumers must exercise discretion in their consumer discretionary purchases. Those concerns just got heightened due to the inflation problem. As we’ve all known well before the Covid-19 pandemic, competitive concerns have been one of AMC’s biggest impediments. People shouldn’t necessarily take comfort in that AMC is not completely in control of its destiny.
Much of the reason why shares are troublesome have nothing to do with the underlying company. Competitive Concerns May Hurt the Box Office
You should be here meme movie#
Say what you will, it’s an admission that the movie industry isn’t quite working out for AMC. Skyrocketing inflation means that your money is theoretically safer in hard assets than paper promises, but AMC stock is a cineplex-based investment. In addition, I find management’s decision to acquire a precious metals miner bizarre. They’re not, and actions speak louder than words. Setting that aside, you’d expect that if the folks behind the memes are correct, the insiders should be buying loads of shares at these discounted prices. Indeed, based on its website, it appears that May of 2019 was the last time any insider bought shares of AMC stock. According to data from, all the insider transactions this year have been sell orders. The key executives, employees and stakeholders of AMC stock have been eager to get out of Dodge. If AMC stock was due for a sizable run up, its insiders have a strange way of demonstrating their confidence. While there’s always a risk in presenting a less-than-optimistic case for investments that have been meme beneficiaries, I’ve got to discuss the pink elephant in the room.
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