Markets
AMC

Why AMC Entertainment Stock Went on a Wild Ride Today

What happened

Shares of movie-theater operator AMC Entertainment (NYSE: AMC) started the day off higher by around 5%. Then they slowly started to fall, declining by around 5% at around 12:30 p.m. EDT. Then they headed a little higher again, sitting at a loss of roughly 2% at 3 p.m. EDT. What's with the seesaw?

So what

The good news that drove AMC Entertainment's stock higher at the open was an announcement that the company is getting set to reopen theaters in Northern California. Like New York, which recently reopened theaters, California is a very important movie market.

Theaters located in San Francisco and the greater Bay Area are included in this update. The reopenings will start on Oct. 30, which is this-coming Friday. There's no doubt this is good news that's worthy of a price increase, as it gets AMC Entertainment that much closer to business as usual. But business really isn't anywhere near normal.

A man and a woman on a seesaw.

Image source: Getty Images.

Indeed, COVID-19 news remains downbeat, with cases on the rise throughout the United States. It's not particularly helpful to open a theater if an uptick in cases leads to government closure of non-essential businesses, again.

Even if that outcome is avoided, there are few desirable movies in the theaters to attract customers. And with many people watching the news of a spike in COVID-19 cases, there's a big question mark around how many customers AMC Entertainment would get, even in a best-case scenario. As investors let the good news sink in, they probably realized that, given the current situation, it really doesn't change much about the company's current headwinds.

Now what

Only the most aggressive investors should even be looking at AMC Entertainment at this point. It wasn't that long ago that the company warned it might run out of cash before the end of the year or in early 2021.

The company is in a troubling situation, at best. Most long-term investors should stay away, noting that company and industry news will likely keep volatility high for the foreseeable future.

10 stocks we like better than AMC Entertainment Holdings
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and AMC Entertainment Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 20, 2020

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AMC

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More