The Motley Fool

Are AMC shares worth buying now?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Cineworld cinema
Image source: DCM

AMC Entertainment (NYSE: AMC) shares have been falling recently. I can’t say that I’m really surprised. It’s part of the meme stock trend that has pushed the share price to stellar levels.

But it appears that reality is starting to set in. The stock has now fallen dramatically from its peak level. I covered the the cinema operator last month and said I wouldn’t buy just yet. I still stick with this view.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The valuation remains far too high for me. As I mentioned before, just as the meme stock investors have piled in, they can also easily start selling too. And I think this is just the start of it. I reckon the momentum rally is starting to lose steam.

Meme stock

Despite the recent share price fall, AMC shares remain a hot stock for small investors. I monitor yolostocks.live regularly and the company regularly appears within the top 10 most discussed stocks on Reddit.

In fact, AMC is currently the top trending meme stock according to this website. To me, this means the share price could be volatile going forward.

Clearly, retail traders still have the company in their sights and it doesn’t make sense to me to buy a stock that’s currently over-inflated. That’s especially so for a company that carries a significant amount of debt.

Things are changing

But the environment is improving for AMC. Most of its sites are open and the continued vaccine rollout should help. What’s encouraging is that pent-up demand is starting to show.

The company recently announced that it set another post-reopening attendance record. It helps when high-profile movies such as Black Widow are released. In fact, more big films are due for release, which should help the firm. It should encourage people to go to the cinema for a big-screen experience.

Recent news

The company has also recently been in the limelight as it shelved its proposal to ask shareholders to allow the cinema chain to issue up to 25m more shares. In a filing with the Securities and Exchange Commission (SEC), it said the proposal has been withdrawn from the agenda for its annual meeting of stockholders.

Previously, AMC had said that it’s looking at share placings to fund potential acquisitions as well as to pay down its staggering debt pile. I’d like to see more focus from the company to tackle its liabilities first.

Cineworld

AMC shares are in a similar predicament to those of Cineworld. The environment seems to be favourable, but the companies are leveraged up to their eyeballs. In fact, according to shorttracker.co.uk, Cineworld shares are within the top five most shorted stocks on the London Stock Exchange. This is where investors are betting that the share price will fall.

For now, I’m steering clear of the stock. I reckon AMC shares could be volatile given their meme stock status.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.