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The Bears Are Wrong: AMC Stands To Benefit From The Reopening Of America

Pacifica Yield profile picture
Pacifica Yield


  • AMC is set to benefit from the total reopening of America as the vaccination rate surges.
  • This will mean the upcoming movie slate is less likely to be delayed.
  • Higher theatre traffic in the months ahead and a lurch of capital to post-pandemic plays should support AMC's stock price.

A large number of bears have come out of tepid hibernation to declare the death of AMC (NYSE:NYSE:AMC) following its rapid short squeeze-led ascent. While this bearish show of force holds some water when describing the unsustainability of such an aggressive move upwards, their thesis begins to crumble when narratives are peddled questioning how effective the three FDA-approved vaccines are. Further attempts to depict the future theatregoers as a relic of a bygone era are also misguided.

The reopening of America in the months ahead presents somewhat of a structural shift for the equity capital markets and will likely see some capital flee highly speculative stocks to companies that have been battered by the pandemic. Hence, while AMC's stock price has heavily gyrated over the last few weeks on the back of retail-led speculative trading, the long-term trend and the wider macro environment is up.

The Reopening Of America

The pace of vaccinations now stands at 1.74 million people per day, after recovering from a dip to 1.3 million due to snowstorms that caused production and supply delays across much of the US.

Covid-19 Vaccine TrackerOur World In Data, University of Oxford (Source)

Total vaccine doses administered has risen to 72.81 million and should at their current pace reach 100 million doses in two weeks. The pace of daily vaccinations is set to rise in the coming weeks to continue its previous upward momentum as vaccine supply constraints get unwinded.

Bloomberg (Source)

March is on track to experience a vaccination surge following the full FDA approval of the game-changing one-shot vaccine from Johnson & Johnson (NYSE:JNJ). A combination of the Johnson and Johnson vaccine and larger supplies from both Pfizer-BioNTech (NYSE:PFE) and Moderna (NASDAQ:MRNA) will likely see more people vaccinated in March than since the start

This article was written by

Pacifica Yield profile picture
The equity market is an incredibly powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend tickers, and green energy firms. By Leo Imasuen

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (64)

So AMC announced yesterday that they have 1.1 billion in cash and they have settled debts for 800 million. Company is rich like hell, but it was a trap for shorts to point it out after bell yesterday.

Now AMC have real fundaments, investor money rolls in and AMC are going go moon while shorts eat dust. There is still 30% of float in short positions scared their ass off.

Look, you can generate CF through operations, loans or investments. Its now a bit like AMC won in lottery; yes they diluted, but so does all shipping companies. AMC holds this equity and invest it to operations. They have done tremendous job in management.

Future outlook is great.
Pacifica Yield profile picture
Be on the lookout for the total debt figure during the earnings call.
Movie going, at least in the USA, was falling for a long time; reopening isn't going to reverse that.
OverTheHorizon profile picture
@firsTraveler it’s going to boom Traveler.
10 Mar. 2021
@firsTraveler But an year of staying at home and watching streaming could change that. Time will tell.
@trsf Maybe in the very short term (say a year which sadly is considered long term on SA).
OverTheHorizon profile picture
"New York DMA Weekend Box Office Booms 525% In Wake Of NYC Cinemas Reopening – Sunday Update" Deadline
AMC is to authorize 500-million new shares upon shareholders' vote in May 2021, in addition to 450,156,186 Shares of Common Stock, issued and outstanding.

Not Good!
Julian Lin profile picture
@User 29423995 Not good for shareholders or bears?
i like how bullish comments are being deleted here
Pacifica Yield profile picture
@Mike Kendall Not sure they are.
Maybe there’s more to the future story in AMC and GME that no one knows about yet . Maybe a big surprise coming . Who knows ? 💎🙌
Turk Malloy profile picture
I will be good for 1 maybe 2 movies- then I will remember why I hated buying 40 dollar popcorn sodas and bought the 65 inch at costco.

Reddit will forget the stock in 6 months, then short it.
So even if America starts to re-open soon, which we are all hopeful it will, there is one other large factor that IMO is a massive anchor on AMC's revenue potential. What movies are being releases to theatres in 2021? Most of the big ones are delayed or being released to streaming services. Those that are getting theatre-first windows are seeing those windows greatly reduced. I don't know if there will be a summer blockbuster season. Or even a holiday season. And if there are some releases, there is still likely to be a lingering mistrust of crowded theatres, possibly forcing a re-imagining of patron spacing that lowers the density to a new normal.

And then there's concessions. Are people going to be as comfortable with popcorn for a while? Hard to say.

And then there's the surge in streaming subscriptions and home theatre purchasing that happened over the past year. That isn't just going to magically vanish either.

Long story short, even if America starts to return to normal, I see a number of fundamentally sound reasons why AMC, and theatres in general, are going to struggle long beyond that point. So for this stock to be above its pre-Covid price is not sound. Perhaps a stock like CCL would be a reasonable comp. It's more than double it's low and halfway back to it's pre-Covid price. I'm struggling to see why AMC would be any better.
The Reddit crowd will destroy all AMC bears, so much fun to watch hedgies squirm !!!!!!!!!!!!!
02 Mar. 2021
@wcf265 you do realize dark pool volume has been >50% for the last 20 days and another 15% block trades. Yeah, all "redditors" lol
PedroCorreiadeOliveira profile picture
@jdur can you share a link with fact’s of dark pool %?
lew69sd profile picture
OMG this is total bonehead article. Buy AMC because people will go back to the movies is basically the entire article analysis. Really in-depth thesis lol!

How about this important fact...AMC was trading $7.50 before the pandemic. That was it! So why would be even higher now? After the massive dilution of so many 2nd offerings.

Every stock rally will be met with millions & millions of shares to sell.

Short this pig. AMC is going to 3.
@lew69sd all about the dilution!
PedroCorreiadeOliveira profile picture
@lew69sd ‘Pig’ is not polite...
This text I’am posting is not mine but is jindungo of my opinion about the subject:


I've been investing for years; 25 to be exact. I bought Amazon in 1998 -- and sold it a few months later. I survived the dot com bubble; survived the Great Recession, and have somehow survived my own greed with regards to triple-levered etf's. Don't get me started.

Until last month, I was a sceptic of the new-era of investing -- the Tesla, crypto, etc. type of investing. The reason was, I was programmed from my youth to pay attention to 'old' indicators of value. P&E Ratio was always the first and foremost indicator I would look at. So, naturally, when I learned about Bitcoin in 2017 like so many others of my generation, it was foreign. Didn't make sense. I wasn't alone. You'll recall that CNBC and WSJ, along with most of Wall Street, deemed crypto a joke and Ponzi scheme. Well, look at them now -- now only is Wall Street, but multiple soverign nations, beginning to speak of a future of crypto essentially replacing the gold standard.

Then there's Tesla. Call me a convert. NOT to the actual valuation of the company -- which, from an old-school perspective, is CRAZY. But I've become a convert to the ideals behind WHY Tesla has gotten to big, and why it hasn't collapsed. I now realize that the key is the individuals buying it are programmed entirely different from how the Boomers and Gen X (myself) were taught. And it's hard to teach an old dog new tricks.

Fast forward to 2021; suddenly, Wall Street is keen on crypto, and EVERYONE loves Tesla -- because crypto and Tesla have made a LOT of guys on the Street a TON of money.

And that leads me AMC (I own 68,000 shares), GME (own no shares, but considering) and all the other meme stocks. I've come to appreciate the power of this new era in which we live, in which a group of individuals can say 'I love the stonk' and create value out of something that the 'old school' technicals say isn't worth squat. But it doesn't matter -- the people who own it LIKE it, they BUY it, and they DON'T sell it. These three acts combined -- with the very important ingredient of very smart and opportunistic individuals sharing information (like DFV) -- turn a $250 million dollar company in GME into an $8 billion dollar company in a matter of one-week, with the insane potential to double in value overnight.

Value lays in the eye of the beholder; the stock is worth what someone is willing to pay. The more and more individuals who say 'I like the stonk' who grab it and hold, create an ATM out of this new medium in which they've essentially created.

Bitcoin, Tesla, and GME -- from a purely technical analysis -- are insanely overvalued. Perhaps AMC will become equally so. But that's thinking with my head. I've come to appreciate that these investments have gotten to their heights, and will continue higher, because the majority of their owners are in with their hearts. THEY/WE LIKE THE STONK.

HF's are in their positions from their heads -- math, greed, etc. The 'meme' stock owners are in it with their hearts. If you've ever seen Braveheart, or any other 'classic' film about battle, you'll know how the army's made up of peasants who are fighting for their lives and land tend to have an advantage over their opponents who are essentially mercinaries. Those fighting with heart tend to win.

That's why I believe in AMC. The grassroots interest in AMC is HUGE. Most are new to the game; a breed of investor groomed from an era in which you trade because you actually LIKE the stock, instead of looking at P&E ratios and analyst ratings. This CAN and WILL be huge.

We just need to HOLD THE LINE! HOLD!”
Andrew Shapiro profile picture
@lew69sd There are other exhibitor stocks that will rally from this point (eg. RDI MCS) but I agree $AMC already more than reflects this rebound
Gary H profile picture
$AMC will struggle to survive post COVID. $CNNWF will survive and thrive. Much better play in this space.
Andrew Shapiro profile picture
@Gary H Frankly $RDI, $MCS and $AMC or $CNNWF. With RDI, you get owned real estate whose value supports the current EV and the cinema business for free.
01 Mar. 2021
This is not a very comprehensive analysis. You also need to look at the fundamentals of supply (movie releases) and demand (consumers wanting to go to the theaters in large numbers, like before), competition (streaming). What AMC management needs to do is be innovative and generate excitement to woo consumers safely back to theaters.
Andrew Shapiro profile picture
@trsf $AMC has always been innovative. Its problem has been the arrogance of senior mgmt who have greatly overpaid for several acquisitions.
Julian Lin profile picture
I’m a bit confused by this article
The premise seems to be that the world won’t change that much after the pandemic.
However even slight changes in consumer behavior will materially affect AMC because of their high debt load
Ian Bezek profile picture
@Julian Lin Assuming earnings go back to 2016-19 levels of $100 million a year or so (which seems highly generous given changes in consumer behavior) the stock would earn 20 cents a share or so annually on its new share count. Throw a 20x PE on that (again, we're being kind) and that's a $4 stock.

I don't get the bull case at all.
Julian Lin profile picture
@Ian Bezek Not to mention that long term debt is up about $1 billion at a 10% interest rate. Even if AMC hits that $100 million target (which seems unlikely), substantially all of it will be offset by higher interest expenses. Not to mention an inability to fund growth Capex.
@Julian Lin @Ian Bezek Assuming they somehow hit that $100 million in earnings, didn't they just give away 8% of that in executive bonuses?
OverTheHorizon profile picture
Excellent. Only have one disagreement and that’s your third opening bulletpoint. The reopening of America and the world will not only support AMC SP but will see it triple in the next 18 months. I know, massive dilution, pending BK, everyone has a big screen and Netflix, blah blah blah.

$30/share and (being optimistic) a P/E in the 150 range? For a company that failed to grow EPS over the ten year period BEFORE Covid came along?

Well, good luck with that and remember.... trust your feelings!
OverTheHorizon profile picture
@T0M. Feelings are a dangerous investing metric.
Azred profile picture
Time is here to make AMC great again! Not everyone wants to live like a hermit and turn to streaming:-)jmo
@Azred totally agree!!
Jamie Samans profile picture
On balance, the bear thesis has never been the simplistic "theaters are dead, people just want to stream" nonsense that comes from the peanut gallery. It's the AMC, already massively in debt and struggling to turn a profit before the pandemic, took on considerably more debt and diluted its shares by a huge amount as a means of surviving the pandemic.

The argument isn't that AMC will not "benefit" from reopening in the sense of getting more revenues. It's that its revenues will not be sufficient to service its debt and deliver meaningful shareholder value, resulting in a zombie company that meanders along in a sector where other vendors are positioned for a genuine rebound.

That's why $8-9/share looks absurd for AMC, which is probably deserving of a $1-2/share price.

This is probably the most reasonable bear argument although I still believe it to be a bit more alarmist and fear based then necessary.

We can’t take the last 10 years figures that seriously after these recent events have forced AMC to change their “perspective” on the debt and expenses.

It’s real for them now.

Nobody knows what revenues will be like with improved cost cutting measures (pandemic motivated) and less bad theaters to prop up with heavy capex spends.

There is hope my friend :)
01 Mar. 2021
Open up the Country. No one likes streaming movies at home all the time. Plus a movie is s great date night because you dont have to listen to your date ramble on about her office mate.
@Dtip Agree 100%. I am still one of the few folks who apparently still enjoys going out to theater to see the latest blockbuster. Watching movies at home is fine and all but nothing replicates a nigh at the theater with your kids, your wife, your girlfriend or just a bunch of your buddies from work going out to the theater on a Friday night.
David Orr profile picture
@gogetter1132 Do you guys realize there are 4 times as many shares outstanding, so the company is 4 times the price than a year ago?
matttrakker profile picture
@David Orr no they don’t. Oblivious.
It's the greatest feeling seeing the slimy hedge fund short sellers get decimated!
So you believe the share price should be higher today than it was before the virus. Even though there is way more debt and almost twice the shares. Got it
@Joeyh72 3 times more shares
Azred profile picture
@Joeyh72 and no other stock is like that👍🏼
@hw711 I can stand to be corrected, but I believe the shares outstanding of 100m is now 420m+. Assuming they achieve pre-pandemic earnings, wouldn't their share price deserve to be 75% less? aka, $2-4/share?
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