Live

Watch CBSN Live

Meme stock AMC continues to ride social media fandom

GameStop, Reddit and the Battle of Wall Street
GameStop, Reddit and the Battle of Wall Stree... 04:22

The meme-stock rally has a sequel, with shares of movie theater chain AMC Entertainment seeing dizzying highs again after rising rapidly this past winter due to a mix of social media cheerleading and easy access to the stock market through millennial-friendly brokerage apps like Robinhood. 

AMC's share price is up more than 50% in the past two weeks to a recent $14. AMC shares started the year at $2 each, meaning the stock price has climbed a blockbuster-like 563% in 2021 so far. 

The stock is being propelled upward, in part, by an assumption that the economic reopening will lead to more movie ticket sales. Shares also appear to have gotten a boost from the Centers for Disease Control and Prevention's guidance that vaccinated people no longer need to wear masks, even in indoor settings like cinemas.

Social media appears to be playing a role as well. On Reddit's popular Wallstreetbets forum, which now has 10 million followers, commenters are again expressing confidence that AMC's shares will go higher. One Reddit poster on Tuesday said shares of AMC were looking "juicy" and predicted the stock could climb above the high it set earlier this year of just over $20 a share.

screen-shot-2021-05-18-at-2-06-27-pm.png
AMC boosters on the stock forum Wallstreetbets say the show must go on -- and on and on. Courtesy of Reddit

Another poster, who goes by the screen name "mo_gunz87," wrote in the youthful lingo of the stock discussion forum: "Too many paperhands losers selling AMC for pennies. Idiots!" 

Still another poster, "Commander943," lamented that he would no longer be able to profit from AMC's stock market run. "My mother sold the stocks I had in AMC without telling me a few days ago," Commander943 wrote Tuesday. 

The continued enthusiasm for AMC stock despite its recent price run-up has some Wall Street analysts nervously recommending investors sell their shares before the movie ends badly. AMC earlier this month reported losing nearly $575 million in the first three months of the year. Sales also dropped slightly from the last three months of 2020. Analysts believe AMC will lose $1.5 billion in all of 2021, and don't expect the company to return to profitability until 2024 at the earliest.

House committee holds hearing on GameStop 01:50

AMC's largest problem — besides reduced capacity during the pandemic and whether or not movie watchers will continue to stream flicks at home, even after the pandemic — appears to be the company's debt, which rose another $900 million last year. AMC now has $5.6 billion in long-term debt, more than double its burden from five years ago.

"We expect continued volatility in shares of AMC, as well as trading momentum unrelated to AMC's fundamentals," Wedbush analyst Alicia Reese wrote in a research note shortly before the movie theater chain released its first quarter earnings. "As such, we do not recommend buying shares of AMC here."

AMC Chief Executive Adam Aron dismissed the company's critics during a conference call with analysts after the company's most recent quarterly report. He said AMC had more than enough cash — nearly $1 billion at the end of March — to get  safely through at least 2022. He also embraced his social media backers, suggesting that all the online enthusiasm for AMC should lead to more business.

"Just go on Twitter, just go on Reddit, just go on YouTube, read what these people write," Adam said on the call. "They love AMC. And these are not people who are just going to be investors in AMC. These are going to be customers of AMC who come to our theaters and enjoy watching movies at our theaters as paying guests."

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.