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AMC Entertainment Vs. Cinemark: The Better Movie Theater Stock


  • Between AMC and CNK, which is the better movie theater stock investment?
  • AMC punished shareholders with dilution and high yield debt.
  • AMC had the opportunity to create shareholder value by paying off high interest debt with expensive equity, yet curiously decided against it.
  • CNK left 2020 with significantly less damage and no dilution.
  • I give my final verdict between the two stocks based on fundamental analysis.
  • Looking for a helping hand in the market? Members of Best Of Breed get exclusive ideas and guidance to navigate any climate. Learn More »

Young woman enjoying watching movie at the cinema
Photo by MixMedia/E+ via Getty Images

With vaccinations continuing at an accelerated pace, readers may be looking for a way to invest in movie theaters. AMC Entertainment (NYSE:AMC) and Cinemark (NYSE:CNK) are the two largest publicly

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This article was written by

Julian Lin profile picture

Julian Lin is a financial analyst. He finds undervalued companies with secular growth that appreciate over time. His approach is to look for companies with strong balance sheets and management teams in sectors with long growth runways.

Julian is the leader of the investing group Best Of Breed Growth Stocks where he only shares positions in stocks which have a large probability of delivering large alpha relative to the S&P 500. He also combines growth-oriented principles with strict valuation hurdles to add an additional layer to the conventional margin of safety. Features include: exclusive access to Julian's highest conviction picks, full stock research reports, real-time trade alerts, macro market analysis, individual industry reports, a filtered watchlist, and community chat with access to Julian 24/7. Learn more.

Analyst’s Disclosure: I am/we are short AMC. 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.

I am short AMC through put options.

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 (169)

Jamie Samans profile picture
Cinemark is BY FAR the better company. From today's vantage point, it is abundantly clear that AMC is the better stock: both AMC and CNK have lost a third of their value in just a few weeks, but for AMC, that's relative to a huge surge that Cinemark never experienced. Thus, today, CNK is actually down almost 6% relative to where it was on January 1, whereas AMC is worth more than 15X what it was on January 1.

On the down days, they fall together. On the up days, money pours into AMC and the CNK growth is tepid at best. It makes no difference that AMC was unprofitable for years before the pandemic or that it remains a bankruptcy risk in the mid-term, nor does it matter that Cinemark has a history of profitability.

As stocks go, investing in CNK during the AMC bubble has just been a terrible idea.
DJEmir profile picture
Well I invested 300 at $4 a share planning to go long into 2022 or 23 when I expect the movie goers to hit the movies strong again but when it hit $63 a share which is twice as high as pre pandemic value I pulled out $2200 then left $300 still in to still have stake if it continues to rise and for other benefits, but I expect it will fluctuate between $30 and $70 overall. I knew at 2 to 4 dollars a share with a pre pandemic value of $34 this was a good bet. When this article came out I was already in at a good price My only regret is I didn't think of this sooner when it was only $2 a share and I could have invested a little bit more.
Authors updates thoughts on AMC? With the 800M raised this week, at I believe an average price of $40 that should significantly raise the floor of the stock price at least for a while...
The author is short AMC. Shorts haven't covered. Synthetic/Phantom shares haven't been bought back from retail investors who are holding strong.

Per Adam Aron, "Short sellers should be sh*tting their pants."
@ryzie Hey I've got a bridge in Alaska at attractive prices, are you interested?
This is one of the articles that influenced my decision to go long on AMC.

Currently, AMC is trading at all time highs and I am up over 122% on my investment. I'll be doubling my position again soon, looking forward to the FTD's coming at the end of June, and the results from the share count. I'm so bullish, I'm Ape-ish!

Something to ponder over.... If the retail investor majority didn't sell when the price dipped into the $5 range, what makes anyone think they will sell out now?
Ed Grey profile picture
@just in it for the money There's a lot more incentive to sell now and make a nice profit. AMC will be using the sale of new shares to pay off debt, which is good for survival, but how does movie attendance now compare to levels before both the pandemic and MoviePass? And MoviePass is completely gone now, dead as a parrot.
@Ed Grey I agree if this was a normal stock without the manipulation. At this point, attendance is not the primary factor.

As I noted in my post above, I would be doubling down on my position which I did. After doing so, I am now up over 4x on my investment (that's after the blatant manipulation on 06/03).

The naysayers are starting to get desperate, the main catalyst for this event hasn't even happened yet, and I'm not leaving.
Ed Grey profile picture
@just in it for the money What is the "main catalyst"? To me, the real catalyst is the long term prospects, which aren't that great. We don't even know when they'll be profitable again, if ever.

Everything else is betting on what you think masses of people you don't know will do next, and then there's another unknown next. Is it "different this time," and the bubble won't eventually collapse? Or are you not the "greater fool" to be left holding the bag? Every day I see it going up doesn't increase my interest in buying shares. Maybe buying or selling puts.

AMC isn't collecting enough money from all the new dilution to pay off enough debt to make a difference, and it's not enough money to be like Berkshire Hathaway in the early days and go into new businesses in a big enough way.

They're not a car company or other major industry, or an airline, so there won't be a bailout. Maybe they can get a debt interest reduction, or eventually sell enough expensive shares to pay down a fairly serious amount of debt. But then the bottom line for another quarter or two or three will have some influence.

It will be interesting to see how long the "apes" can keep the bubble aloft. But as apes cash in, new apes will be needed.
Makes no sense why you would choose to short AMC with the WSB herd following when there are tons of other shit stocks to short. This will be a lesson for you Julian. I have no position to sh1thole AMC, but I'm not foolish either..
Julian Lin profile picture
@JoeD23 Well I'm not "short" I'm long put options..
@Julian Lin fair, still think theres better options
legend.vs profile picture
@Julian Lin I would say your puts are going to zero now.

I could have been up almost 5x on the stock, but 2x on the bonds. All thanks to WSB and short sellers. AMC will be very well capitalized going forward EVEN with zero revenue.

AMC Entertainment

$15.66 →

$0.97 (7.47%) Today

$1.71 (12.26%) After-Hours
Shorts lol lol!!!!!
@jkortsan here we go to $20 then who knows where !!!!
johnx4x profile picture
Looking to short when this gets high enough.
1. Less people like going to the movies. ... even without covid.
2. Hollywood has failed.. and more content is being made through streaming

I don't think I even need to make a 3rd point here
@johnx4x go ahead good luck you’ll just help it get to $60 a share lol
@johnx4x Whats high enough?
@johnx4x AMC

AMC Entertainment

$15.66 →

$0.97 (7.47%) Today

$1.71 (12.26%) After-Hours

Literally just do the opposite of what any Seeking Alpha Contributor writes and you'll make money. All of the stocks that they're super bullish on are way down and vice versa. AMC is gonna hit $100+ whether these haters like it or not. Just be prepared shorts. You don't want to be caught with your pants down.
Julian Lin profile picture
@Trader Joey $100?! How do you think it will get there?
Ed Grey profile picture
@Julian Lin He's planning to clone himself, and his money, and they will buy up shares and call options.
@Trader Joey it’s called exaggeration he’s saying it’s going up big time and shorts will get screwed so let’s make some money honey!!!!
Think Long Term profile picture
The AMC squeeze is going to make GME squeeze look small in comparison....putting Shitadel out of business is going to be EPIC
Shorts LOL hahahaha!!!!!!
johnx4x profile picture
@jkortsan if it reaches 40 I will short the fk out of it
@johnx4x bold move lol
@johnx4x that’s fine youll just help the situation of having being more shorted to move to $100 a share lol
June 18 $40 calls most volatile call buying today!!! Bring it on!!!
AMC.......... think Hertz Car Rental!
Hertz was allowed by the SEC to issue more shares and many here on SA thought this was a strange way to treat Shareholders Less then
a Year Ago.
Today hedge funds are stepping in to Purchase Hertz.
Hertz shares are now selling for @ $3.60 a share.
AMC @ $11 per share now.
A great time to Buy and Support AMC.
I think we'll see another Short Squeeze pushing AMC to $50+.
A solid Buy Right Now!
Go for The Dough and Buy AMC!
Ed Grey profile picture
@HereToWin This doesn't look so great to me. It's amazing how so many people will look for cigar wrappers in the gutter, when there are smokeable cigar butts and even pocket change close by. So much for the efficient market theory, which ignores real-world psychology.

Every time there's more dilution, some people think, "Great! More shares to buy!" Or: "The WSB crowd is bound to jump in again!" It makes the optimistic response to the stock split of a successful company look absolutely brilliant in comparison.


Hertz Proposes Shareholder Payout as Part of Bankruptcy-Exit Plan — 2nd Update

Apr 21, 2021

Hertz proposed in a chapter 11 exit plan on Wednesday that current stockholders receive warrants to purchase up to 4% of the restructured business, the first time the company has said it is worth enough to distribute some value to its owners.

The shareholder distribution would amount to a recovery of 60 to 70 cents per share, a "material return to equity," Hertz lawyer Thomas Lauria said during a court hearing Wednesday.

If approved by the U.S. Bankruptcy Court in Wilmington, Del., that outcome would make Hertz a relative rarity in corporate bankruptcies, in which equity ranks behind debt and most often is wiped out.
AMC has taught retail investors a lot about the stock market but the most important thing I learned never trust an article written by someone who’s short on a position
Julian Lin profile picture
@usausa2020 ...but it's ok to "trust" an article written by someone who's long a position?
Ed Grey profile picture
@Julian Lin I guess we're left with Keynes's aphorism about the market's ability to stay irrational. I agree that AMC is junk as an investment, a few flakes of tobacco for the price of a nice Carrillo, but there are so many layers of fanboyness surrounding it - seeing WSB as a permanent massive force, movie theater nostalgia, the idea that everybody will obviously flock back to the theaters, being "contrarian" about dilution, etc.

I'm holding puts that expire in 2023. I haven't asked my broker yet what the fees are for shorting.
@Ed Grey Schwab charging 67.25% today but no shares available
OverTheHorizon profile picture
Both have 50% upside with AMC the potential for 100%. It is not going bankrupt and is not reliant on a short squeeze to see it’s stock price double.
Ed Grey profile picture
@OverTheHorizon It's easy to say that without any proof. Why not say that AMC will double the number of shares again and will have a 200% upside? Or that they'll do some magic with Bitcoin and go up by 500%?
OverTheHorizon profile picture
@Ed Grey Making predictions is always difficult—especially about the future.
Julian Lin profile picture
@OverTheHorizon How did you come up with 100% upside?
AMC will go The Way of Hertz.
Get over it and pick a better investment.
AMC was in trouble before The Pandemic.
Think Amazon Prime......
@HereToWin funding through 2022. Not including revenue produced during that time. Number 1 theater chain. CEO that has worked miracles turning companies around on brink of bankruptcy. You’re insane.
Julian Lin profile picture
@Quamikaze They have possibly enough cash to fund some losses, but the covenants exist.
Have you checked valuation?
Ed Grey profile picture
@Julian Lin Valuation means nothing to these people. "Intrinsic value" is "quaint," like the Geneva Convention was "quaint" 15 years ago.

If enough people can be con-vinced to buy shares (emphasis on "con"), the price will be a self-fulfilling prophecy. "It goes up because it goes up, and that's good enough for me."
atpalpha profile picture
Lousy business, lousy companies. Deciding between these two companies is like debating whether you should berth port or starboard on the Titanic. Much better places for my money.
@atpalpha thanks for the input I guess.
atpalpha profile picture
@William Wallace 608 I think the author’s analysis is accurate, but I just don’t see the appeal for either of these companies other than for trading purposes, which is fine if that’s your game. I’d love to be wrong so all the people who work at these companies can keep their jobs, but it’s going to be a struggle. My wife and are in the 60+ club and we haven’t been to a movie theater in at least 3 years and that was a matinee show with discounted tickets to see, oddly enough, The Big Short. Most of my friends and family don’t go to movies either. Perhaps my opinion is tainted too much by my personal experiences. Heck, I hardly ever go to McDonalds, Starbucks and the like and they seem to be doing just fine. LOL
Andrew Shapiro profile picture
@atpalpha You are not the target audience for much of the studio blockbuster product anymore. But I can't wait to see James Bond on the big screen.
Off His Game profile picture
Cineplex - CGX is better than both of them
Andrew Shapiro profile picture
@Off His Game yes and $RDI better than $CGX
Off His Game profile picture
@Andrew Shapiro 150M market cap? Risk is too high - CGX was bought out for triple its current price just prior to covid
Andrew Shapiro profile picture
@Off His Game smaller capitalization does not in itself make something risk. Plenty of large cap companies have great risk. $CGX has greater debt/capital to RDI even before taking into account the millions of sq feet of real estate RDI owns in fee for years - worth far more than on its books for. RDI has far lower burn rate due to its better geography of where its theaters are (1/2 screens in New Zealand and Australia) and also cash flowing non-cinema real estate (shopping centers) down under as well. With its non-cinema real estate alone worth more than $RDI currently depressed Enterprise Value you get the #3 market share in New Zealand #4 market share in Australia and #10 box office share in US for FREE. So IMO $CGX is FAR GREATER risk than $RDI at present prices.
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