Last Tuesday, AMC Entertainment (AMC) executives disclosed a modest $10 million stock sale. The CEO’s late-year sale is commendable. For much of the year, CEO Adam Aron did not do much noticeable selling.
This time is different. In a negative way.
The CEO sold 312,000 shares at an average price of almost $31. The CFO sold 18,000 shares. This is a pre-arranged sale. Still, the movie theatre business is broken. Studios continue to experiment with box office releases in theatres and on streaming. Profit margins are infinitely higher on streaming platforms. Furthermore, hit titles available exclusively on one platform and not another is of strategic value.
Streaming services may build a moat with exclusive releases. They need to attract more subscriptions than rivals before competitors take their market share. The total revenue from streaming will eventually surpass movie studio releases.
AMC is stuck with a shrinking business. It announced it would accept cryptocurrency payments for movie ticket purchases. This is more of a gimmick than a business driver.
GameStop’s (GME) quarterly loss and uninspiring conference call is another warning signal. Both GME and AMC meme trading lost their momentum in mid-summer. The Reddit group lost its momentum when their stock picks surged for the last time in June.
Beware of AMC, GME, and meme stocks.
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