Is It Worth Investing In AMC Stock In 2022? A complete End To End Analysis!
In March, the AMC stock had gained a lot of popularity and had seen colossal price growth. As per the different statistics, the AMC or the movie theater company has seen vast gains of approximately 30 percent. The main reason behind such aggressive growth was the acquisition of a significant stake in the gold mine. But in April, the Price went sideways and cooled down. But if we look for the long term, AMC could be one of the best stocks offering colossal ROI. In this blog, we will talk about some of the best reasons why investing in AMC stock could be quite fruitful.
What Is AMC And What Does It Do?
AMC Entertainment Holdings works in the theatrical exhibition business. It is founded in the US but operates all over the globe. The AMC in the US has opened up where theaters are on lease and building some. Some countries it operates are Saudi Arabia, Denmark, Norway, Finland, Sweden, Portugal, Italy, Germany, Spain, and many more in Asia and Europe. It has been more than 100 years since the company was founded by Maurice Durwood, Barney Dubinsky, and Edward Durwood.
AMC Company Analysis
According to the technical analyst, the stock prices of AMC Entertainment group are steadily rebounding. Although they have been impacted by the pandemic quite hard, it is recovering, and still, most people always choose AMC Theaters to watch movies and spend their weekends.
The revenue reports and studies found that the AMC had suffered a considerable loss during the pandemic, and the revenue fell by 77% in 2020. Before the pandemic, the payment was $5.5 Billion, and after, it got reduced to $1.2 Billion.
Fortunately, the discovery of vaccines and people returning to everyday life has positively impacted the growth of the AMC company. With the recent launch of movies such as Top Gun Maverick and Jurassic World Dominion, millions of guests watched movies in the AMC theaters. This has led to the birth of some trust and motivation among the traders that it will rise back. It made a total profit of 800 million in Q1 and is expected to grow more. The AMC stock price was around $6.38, which is relatively better than the stock price of $4.7 in Q4 2019.
AMC Stock Price Valuation
Many of you must be wondering if the valuation of the AMC stock price is equal to or more than what it was a few years back. In this section, we will try to answer this question. As we discussed earlier, there was a significant impact on the revenue during the pandemic, so the AMC company is trying to recover from this loss. If we look at the Price of AMC stock in 2019, it was half what it is now.
The company’s current valuation is around $11 Billion, which is half what it was last year. Still, many traders are bullish on this. But overall, the business had single-digit revenue a few years back, considering the equity and the debt. Although it might sound bullish, the valuation of AMC stock has been quite underperformed and has good potential.
Here Are Three Main Reasons You Should Invest In AMC Stock In 2022
AMC Stock Has MemeStock Effect
In the year 2021, when it started taking off, many people criticized and thought that the meme frenzy had led to an increase in Price. But the rise in Price was not short-term, and it was bullish for more than a year. And this showed a lot of hedge funds bet against it.
Since many retail investors were investing due to the short-term sellers and not because of the strong business fundamentals, the AMC stock was soon listed in the list of MemeStocks and became immensely popular on social media like Reddit.
With the sudden increase in Investments by Retail Investors, the Stock has seen a return of more than 1000 percent in 2021. Their passion for holding the Stock increased demand and made AMC’s Fundamentals worthless.
If we look at the short-term performance, AMC is still rising. And As per the latest data by Yahoo Finance, it is at the 20th percentile in the list of other stocks which are considered to be a good investment.
AMC Has A Long-Term Plan For Its Growth And New Launches
According to the CEO Adam Aron, They have been trying to create long-term value for AMC and its investors. Also, he is working hard to match the fundamentals to the accurate valuation of the company. The recent Fundraising done through AMC stock price appreciation will be used for some good reasons, such as –
- Improvising the company infrastructure and its theaters.
- Also, they would try to pay down the loans and debt.
- Working on building up relationships with other businesses for mergers and Acquisitions.
In the coming months, AMC will renovate its Dolby Cinema Screens and IMAX. Also, an NFT program would be launched to allow the audience to pay using cryptocurrencies. Also, this program would attract the youth and techy people.
They have partnered with the Orange Comet, with whom they will be minting themed NFTs, and some Walking Dead NFTs are priced at USD 50. Also, there would be some 750 Unique Animations that will cost around $250.
Also, AMC is planning to invest and start its retail brand for popcorn. As per the recent Investment reports, they have invested in Silver and gold mining firm Hcroft(HYMC).
AMC Finances Are In A Good State
As we discussed earlier, the yearly revenue is constantly increasing. Also, AMC has achieved some upbeat earnings and a good cash flow in the recent few months. And this was all possible because of the AMC shareholders and their trust in the company. In the recent revenue report, the cash flow was around 1.8 Billion USD.
AMC is trying to engage shareholders with the company through various Investment programs. Some perks are being offered to shareholders, such as large popcorn refills and huge weekday discounts. Also, for every spent at AMC stubs, the customers would be rewarded with points they can further redeem for real money.
What To Expect As A Price Movement Of AMC?
As per the analyst, there are some points that you should know file making an investment.
- A high potential squeeze for the price can happen anytime
- A lot of Headlines are advising to Invest in different stocks.
- A lot of retail investors would be investing in it.
- Various Short term gains.
- Huge volatility with upward forces to the price action.
Final Verdict On Is It Worth Investing In AMC Stock In 2022
Now concluding, is AMC Stock entirely worth investing in or not? It depends on you; if you believe that AMC as a company can outperform in the coming few years and give colossal ROI, then you should consider investing in it.
If we talk about companies, operating such businesses has relatively high costs. And AMC as a company needs a lot of upfront money to maintain and upgrade their cinemas, which they will be doing.
Due to heavy losses in the pandemic, the recovery would be pretty slow due to the fixed cost of the operations. So it might take some time to give you significant ROI on your investment. This might not be a good choice if you seek short-term gains.
But before you come to any conclusion, it is advisable that you do complete research and don’t end up making losses.