AMC Entertainment drops to 10-month low and closes below $14
- The AMC fell early in the week, undermined by risk aversion.
- AMC was pumped by The Batman’s involvement, but all it did was a dump.
- Further losses are likely as the trend remains strongly bearish for AMC.
Update: AMC’s stock price followed the pessimistic mood seen on Wall Street on Monday, after a mixed start to the week. Growing uncertainties over the Russian-Ukrainian war, combined with soaring borrowing costs around the world due to expectations of a hawkish Fed pivot, soured the market. Peace talks between the two warring nations were “suspended” to continue on Tuesday. Meanwhile, US Treasury yields hit new near-monthly highs on the 25 basis point rate hike expected next week. Adding to risk aversion, further lockdowns in Chinese cities due to the resurgence of covid have raised doubts about the country’s economic recovery. AMC’s stock price fell to a fresh 10-month low of $12.96 before recovering ground towards the New York close. The stock price ended the day down 5.17% at $13.56.
AMC Entertainment (AMC) stock continued to edge closer to $10 as it shed 6.6% on Friday. The stock was under pressure despite a strong opening weekend for the new Batman movie. AMC says it was the third highest weekend since the pandemic, and this weekend would have been another strong as well.
However, AMC theaters may be full, but AMC shareholders don’t see the benefits as the stock price keeps falling. It’s not just AMC’s fault. The broader market is down along with global prices in a new environment of both geopolitical and macroeconomic risk. AMC as a growth stock is particularly unsuited to this new environment, which is why we have set a price target of $10 on AMC.
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AMC Stock News
Another strong weekend for The Batman, but it failed to ignite stock last week. Monday should see a rebound as global markets look to peace talks and hopes are high in equities as all markets are up sharply this morning. AMC’s follow-up will be telling. There are also some recent insider sales from Benzinga, which are reasonably sized. By now we are all familiar with insider buying and selling. Research shows that insider buying is more important. People sell for different reasons, but that’s still a small negative sign.
Source: Benzinga Pro
So far in 2022, it hasn’t been a good time for growth stocks, and that’s unlikely to change anytime soon. Rivian (RIVN), the poster child of November’s IPO spike, is taking a beating as the latest results once again disappointed investors.
AMC Stock Forecast
On Friday, AMC closed below key support at $14.54. This is the first close below this key level and, in our view, marks a serious bearish development. We may get a bounce on Monday, but it will be of the dead cat variety. There is some downside support from $12.20, but the allure of $10 will be too high once it comes into view. Short-term interest has increased, but nothing too dramatic – around two days to cover based on current volumes. You should expect short-term interest to increase as the security declines.
AMC stock chart, daily
The author is long met Rivian.
Update: After a positive start to the day, Wall Street turned red mid-trading in the US, with all three major indices ending the day with losses. AMC Entertainment is down 4.55% and changes hands at $13.63 per share. The Dow Jones Industrial Average was the best performer on Monday, ending the day roughly unchanged, while the Nasdaq Composite was the worst performer, losing 2.04%. Yields on US government bonds soared, with the 10-year Treasury yielding as high as 2.147%, a multi-week high. Market participants are pricing in a rate hike from the US Federal Reserve, which is due to meet next Wednesday and pull the trigger for the first time in the pandemic era.
The mood has deteriorated as the Ukraine-Russia crisis continues to escalate. The latest round of peace talks has been “suspended” according to Ukrainian representative Mikhail Podolyak, who also said talks would continue on Tuesday. Meanwhile, the United States has told its NATO allies it believes China is willing to provide economic and military support to Russia, while the European Commission has announced a new round of sanctions against the Russian people and entities. Despite the gloomy atmosphere, commodity prices fell slightly at the start of the week.
Update: Trading as low as $12.92 near Monday’s open in New York, AMC will be encouraged to see stocks rally back toward last Friday’s closing price. 90 minutes into the first session of the week, AMC stock is down 1.6% at $14.07. Since the open where shares traded down 7%, nothing short of a rally has engulfed the famous cinema chain. All three major indexes are up at the moment, although the Nasdaq is only up 0.2%. When AMC shares fell below $14.54 last week, FXStreet noted that the next major support zone was at $8.95. What the market is saying today is that shareholders will definitely fight back before beleaguered stocks get back out there. It looks like there may be a hidden group of investors lured by AMC’s latest earnings announcement, which showed the theater chain growing its revenue rapidly.
Previous update: AMC stock opened sharply lower in another disappointing move for AMC monkeys and other investors of the name. The FXStreet price target of $10 was not meant to be short-term, but AMC stock may trigger a move towards that level sooner than expected. The macro environment has totally changed and rate hikes are on the way from the Fed this week. Stocks with a high growth rate or excessively indebted will continue to be severely penalised. AMC is currently trading at $13.18, down 7.2% in the first five minutes of trading. This is entirely a surrender trade now that the support at $14.54 has been broken. Regular readers will know that we have identified this level as key for a few weeks now, and we have stuck to our bearish outlook even though we are aware that many of our readers are holding the stock. It gives us no pleasure to bring bad news. $8.95 is the next major support.