Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)

Email this Article

Send with mail | ahoo instead.
Required Needs to be a valid email
Required Needs to be a valid email
Why AMC Stock Isn't a Buy Low Right Now
https://moneymorning.com/?p=1166399
Required Please enter the correct value.
Twitter
Stocks: AMC, GNUS, OSTK

Why AMC Stock Isn't a Buy Low Right Now

By Garrett Baldwin, Executive Producer, Money Morning • July 31, 2020

Start the conversation

Comment on This Story Click here to cancel reply.

Or to contact Money Morning Customer Service, click here.

Your email address will not be published. Required fields are marked *

Some HTML is OK

Garrett BaldwinGarrett Baldwin

I've seen some fantastic stock opportunities since the pandemic hit the U.S. economy.

We saw the fastest sell-off in history, followed by one of the most rapid recoveries in history.

We've seen Overstock.com Inc. (NASDAQ: OSTK) soar tenfold as traders piled into the stock after the sell-off. An unknown company called Genius Brands International Inc. (NASDAQ: GNUS) ran up fivefold after announcing comic books based on Stan Lee's characters. Finally, Waitr Holdings Inc. (NASDAQ: WTRH), based in Lafayette, La., jumped more than 1,300% during the pandemic.

These successes have investors looking at beaten-down stocks they think will surely explode higher as soon as the pandemic is behind us. These are usually airlines, cruise lines, casinos, and theater stocks. But that's just wishful thinking, especially when it comes to a stock like AMC Entertainment Holdings Inc. (NYSE: AMC).

New Extra Income Hack: This could be your shot to collect $1,000 to $5,000 a week - regardless of how volatile the markets are. Find out more...

Some investors are placing bets that AMC theaters will be the next unlikely success story. AMC is one of the largest movie theater companies, with about 1,000 theaters and 11,000 screens in the United States. After all, the pandemic can't last forever, and someday we will all go back to the movies like nothing ever happened, right?

"Someday" may happen, but it won't be anytime soon.

And it may be too late for AMC...

It Doesn't Get Better Soon

AMC has now delayed theater reopenings several times. With the virus running across much of the planet once again, few people will be heading to the movies.

AMC is living on borrowed money right now, too. And that's not a recipe for big shareholder returns.

The company sold $500 million of notes with a 10.5% coupon back in April. While that gave the firm some cash to use in the short term, it now must pay interest on that money. The company already had about $5 billion of debt outstanding, so adding to the debt load to delay is just rearranging the deck chairs on the Titanic.

If I had a fund manager working for me who bought these bonds, I would have fired them.

Digging into the Dollars

Before you pull the trigger and buy shares of AMC in the hopes it recovers some of the 65% it has lost in the past year, keep something else in mind.

This stock was dropping before the pandemic arrived in full force. Movies are not as popular as they used to be, especially with major studios gearing their offerings toward paint-by-numbers action sequels that play well internationally. Plus, a date night at the movies can easily run over $50 with a few snacks. Patient fans are increasingly happy to wait for a movie to show up on a home streaming service and watch it for $5 or less.

In turn, AMC was already struggling to generate cash flows and profits before movie theaters were closed by state and local governments to prevent the spread of the virus. The amount of debt owed by the company has gone up every year since 2014, so in no small degree, the company has been living on borrowed money.

It gets worse too.

AMC has not paid rent in several months.

While their landlords have been gracious in negotiating rent deferrals and even cancellations so far, they will not do so forever. Most of their landlords are real estate investment trusts who have obligations and debts of their own, and they will be forced to move against AMC to collect rent or cancel the lease.

A group of AMC's bondholders has already declared that the firm is in default on their obligations, and their plans to execute a debt swap to restructure the debt is inadequate. The lenders include private equity firms, including Apollo Global (APO) and Ares Management, who are highly unlikely to back down without a fight. It is a safe bet that they had a definitive plan to make money by liquidating AMC before they ever lent the struggling company a dime.

There have been some weird and wonderful stock stories since the pandemic began. The amazing recovery of a chain of highly indebted movie theaters that cannot reopen due to the virus's renewed spread will not be one of them.

Instead of speculating on a clunker like AMC, you can do a lot better by zeroing in on the best stocks on the market.

And we've done the research for you.

You can get our list of the seven best stocks to buy now just for being a reader.

Click here to see the list of stocks that will crush AMC's returns...

Follow Money Morning on Facebook and Twitter.

Join the conversation. Click here to jump to comments…

Garrett BaldwinGarrett Baldwin

About the Author

Browse Garrett's articles | View Garrett's research services

Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.

… Read full bio

Login
guest
guest
0 Comments
Inline Feedbacks
View all comments
LIVE
Visit Money Morning Live


Latest News

January 19, 2023 • By Money Morning Stock Research Team

These Stocks Could Go To $0

January 9, 2023 • By Money Morning Stock Research Team

The Government Is Pouring $391 Billion Into These Stocks - Buy Now

December 27, 2022 • By Money Morning Staff Reports

6 IPOs in 2023 You Can’t Afford to Miss
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover This Is VWAP Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Warlock's World Penny Nation Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Vega Burst Trader Flashpoint Trader Darknet Hyper Momentum Trader

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell My Info

wpDiscuz