About AMC Entertainment Holdings Inc
AMC Entertainment is a US holding company that operates the world’s largest cinema chain through its subsidiary, AMC Theatres. It was founded in 1920 in Kansas City, Missouri by Maurice, Edward, and Barney Dubinsky (as the Dubinsky Bros). The company changed its name several times throughout its development before being renamed American Multi-Cinema in 1961. It has headquarters in Leawood, Kansas.
What started as a small, family-run business went on to become the world’s first multiplex cinema chain, serving over 200 million customers across 380 locations per year. Between 2012 and 2018, Chinese conglomerate Wanda Group owned a majority stake in AMC, although this has since been diluted due to fresh financing from the business itself and investment from other firms.
What does the company offer?
AMC owns and operates several cinema chains throughout the US and internationally, including Odeon, Finnikino, UCI Cinemas, Carmike Cinemas, and Screenvision. It licenses first-run films from distributors owned by large film production companies, as well as films from small, independent distributors.
The company offers amenities such as power recliners, dine-in theatres, IMAX and Dolby Cinema visual experiences, and various food and beverage products such as hot dogs, soft drinks, popcorn, and alcohol.
It also offers a membership loyalty scheme called ‘AMC Stubs’ through its mobile app, where customers can receive benefits such as free food and exclusive offers, screenings, and discounts.
The company operates close to 1,000 theatres and 11,000 screens internationally. Perhaps most notably, AMC Entertainment has over 8,000 cinema screens in the US and Canada – more than its competitors Regal Cinemas and Cinemark, according to Statista.
The group conducts operations through two segments: US markets and international markets. In the UK, subsidiary Odeon has the second largest market share based on revenue, accounting for over 20% of the market.
The business employs more than 4,000 full-time and 35,000 part-time staff across the globe.
History of AMC’s performance
AMC Entertainment is listed on the New York Stock Exchange under the ticker AMC and is a constituent of the Russell 2000 Index, which is a measure of small-cap companies in the US. The business was acquired by Chinese conglomerate Wanda Group in 2012 for $2.6bn, making it the world’s largest cinema operator.
Wanda Group later organised an initial public offering (IPO) for the company which took place in 2013 at $18 per share. Following this, AMC traded at a fairly consistent price of between $20 and $35 until mid-2017, when its stock started to drop.
Before Covid-19, the company had been struggling financially due to the decline of the bricks-and-mortar cinema industry, which has accelerated since the pandemic. From March 2020 to early 2021 the stock traded at between $3 and $10 – penny-stock territory – as the closure of cinemas due to Covid restrictions pushed the company deeper into debt. By the end of 2020, AMC Entertainment’s share price was at an all-time low of $2.12, making it a perfect stock for retail traders to short.
What was the AMC short squeeze?
By January 2021, growing numbers of retail traders were engaging with social media platforms such as Twitter and Reddit – the latter home to the stock and options trading forum WallStreetBets. At the same time, many hedge funds held short positions on AMC since, in their view, the company had weak fundamentals as it faced strong competition from online film distributors.
Retail traders decided to focus on reinvigorating the share prices of struggling businesses like AMC. This led to one of the largest short squeezes in history in June 2021, with AMC’s stock price reaching an all-time high of $72.62, an increase of 3,325% from the start of the year. At one point, it was the most shorted Reddit stock in the market, according to Yahoo Finance.
At the end of the year, the stock was up 1,183%, and has been trading with volatility ever since.
As a result of the short squeeze, the company was able to raise money to get its financials back on track, thus diluting Wanda's ownership. In February 2021, Wanda converted its Class B shares to Class A shares, reducing its voting power.
Is it a meme stock?
AMC is often described as a ‘meme stock’, a term that refers to a company that experiences a sudden spike in trading interest, typically stemming from online discussions on social media platforms like Reddit. The buzz around meme stocks tends to excite traders as share prices are propped up.
Heavily shorted stocks are usually favoured by the meme stock community, as the aim is to squeeze anyone who has been shorting the stock into covering their positions. In this case, the company’s highest level of short interest was recorded at 66% in December 2020, according to data from ORTEX, when AMC’s share price was trading around its lowest point, prompting retail traders to strike.
Since then, the outlook towards the company has been considerably more bullish. Short interest hovered around the 20% mark through 2021, according to ORTEX, although the stock still experiences volatility. This raises questions over whether AMC will remain a meme stock going forward.
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