So far this month in November, AMC Entertainment (NYSE:AMC) is getting a lift despite looming bankruptcy risks. The theatre company is completely reliant on staying solvent and the Covid-19 pandemic ending. It sold shares to avert bankruptcy in the near-term but the pandemic is getting worse.
Investors betting on movie attendance recovering are taking too big a risk. The pandemic is getting worse as positive cases rise worldwide, especially in the U.S. and in Europe. Another lockdown is a high possibility. This will force movie theatres to close.
AMC barely mentioned its revenue performance in the third quarter. Revenue fell 91% to $119.5 million. Attendance worldwide also fell by 92.5% to 6.5 million. So, if the previously easing lockdown did not encourage movie attendance, the worst is yet to come.
Fundamentals will detach itself from AMC stock. Speculators may buy shares on hopes that the vaccine from Pfizer (NYSE"PFE) and BioNTech (NASDAQ:BNTX) will end the pandemic. If it works and the company ramps up production for worldwide administration, then AMC needs to find a way to stay in business while the movie attendance slowly recovers.
AMC has too much debt on hand, although it deferred the maturity worth $1.7 billion until 2026.
