Loop Capital has come out swinging against AMC Entertainment, the meme stock that has defied all odds this year. According to CNBC, Loop analysts have doubled down on their AMC warning, reiterating a “sell” rating on the stock. The reason they cited was “too many screens,” even as the movie chain is in the midst of an expansion push in which it plans to grow its footprint.
AMC investors have heard it all before, and they maintain that they are not going anywhere. The stock price was meandering between positive and negative territory before the bears gained control and sent shares lower by about 3%.
Loop Captial reportedly has a USD 1 price target on AMC, while shares traded as high as USD 72 last month. Loop Capital’s Alan Gould has been arguing lately that the valuation just doesn’t add up in light of the company’s fundamentals, a dynamic he is hard-pressed to believe can hold up for the long term.
Despite Wall Street’s disbelief about AMC, investors are showing signs of staying bullish on the meme stock. Even today, analysis firm Roensch Capital revealed that of the 126,000 options contracts traded on AMC, more than one-third of them are bullish calls compared to 36% bearish puts.
AMC CEO Adam Aron recently reversed course on a plan to issue 25 million more shares, and the stock has taken investors on a roller-coaster ride since then. For the month of July so far, AMC has shaved close to 15% off its value. The sentiment on social media among retail investors is to hold on. They are theorizing that after holding on this long and watching as the price fell from its peak to below USD 40, why not hang in there and wait for the potentially bigger short squeeze?
AMC is banking on consumers continuing to return to the box office this summer to bolster its sales. Otherwise, Loop Capital’s theory that the movie chain is carrying “too many screens” could be proven right.
This weekend, AMC is touting films such as “Black Widow” starring Scarlett Johansson and William Hurt as well as “The Forever Purge” featuring Ana de la Reguera, Will Patton and Josh Lucas. The company also announced the release date for the upcoming Chance the Rapper Magnificent Coloring World to its theatres on Aug. 13, the tickets for which go on sale next week.
This article was originally posted on FX Empire