Shock and Awe or Love and Thunder as Thor to the rescue

  • AMC fell 3% on Wednesday as inflation hurt risk assets.
  • AMC continues its summer blockbuster lineup with the Thor movie.
  • AMC CEO Adam Aron is calling for a crackdown on short sellers.

AMC shares failed to benefit from the recovery in US stocks after another CPI report. Stock indexes were down nearly 2 percent based on futures markets just before the open, but rebounded sharply as investors took the bad news for good news and bet on a faster-than-expected rate hike cycle followed by an impending US recession and interest rate cuts. I can’t understand how this is taken as good news, but the market exists to disappoint us most of the time, and again it lives up to Walter Diemer’s adage.

AMC Stock News: Thor: Love and Thunder

AMC had a good summer in terms of box office numbers and stock performance. AMC shares are up 33% in the past month as summer blockbusters continue to break box office records. We had Tom Cruise and the 80s gem Top Gun: Maverick, followed by a return to the 90s with Jurassic World Dominion, Minions and now Thor: Love and Thunder. We believe this is the highest opening ever for the Thor line of films with sales exceeding $140 million.

AMC has seen a strong summer of attendance, regularly surpassing pre-pandemic 2019 attendance. Retained demand certainly plays a role here. All of which should at least make good copy for CEO Adam Aaron when AMC reports earnings on Aug. 4. The CEO recently tweeted to try to reassure his AMC Apes that there will be a “brief raid” coming soon.

We take that to mean he’s bullish on Q2 earnings, and AMC shares are up about 15% after that tweet. Adam Aaron regularly plays to crowds and interacts with his newfound retail following. We don’t think it’s a good look for CEOs, but it’s becoming commonplace. CEOs are marketers after all. As a former Wall Street nerd, I know the Kool-Aid doled out by CEOs at investor presentations. I have yet to meet a person who does not talk about their stock and their company. It is usually in institutional formats and language, so it is considered more acceptable. Here, CEO Adam Aron has identified that his shareholder base is already a retailer and has simply adapted his trade advertising accordingly, but I think that should be ignored.

AMC Stock Forecast: More money coming in, but more money going out

Revenues are increasing, so that must mean more profits, right? wrong! AMC is forecast to remain loss-making, with an EPS forecast of $-0.20. That’s a narrowing from the previous quarter, but cash flow is shrinking and cash is being burned. Yes, AMC has amassed a strong cash pile, but a few more quarterly losses will take care of that. AMC will struggle with rising interest rates and the impending recession. The company just avoided bankruptcy during the pandemic, but it may just delay that event. There is more debt now than before the pandemic.

We can at least take some credit for being really optimistic about this in the short term lately. Yes, I am bearish on the long term, but AMC has formed a bottom and the triangle breakout has now happened. We had identified $22 as a breakout target, so this could still develop. The key support is the breakout level of $14. AMC needs to hold this to stay on target for $22.

AMC schedule, daily

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