- AMC Entertainment < AMC> stock might be widely regarded as just a meme stock, but it deserves better.
- The company's financials are improving, and AMC Entertainment just acquired a company that could add significant value.
- Investors should start a small stock position in AMC Entertainment if they're willing to accept the volatility.
Kansas-headquartered AMC Entertainment < NYSE:AMC> operates a well-known movie-theater chain on a global scale. While some folks only know AMC stock as a wildly volatile meme stock, investors should take the company and stock more seriously and even consider owning a few shares.
Here's something you probably didn't expect. Apparently, Ray Dalio's Bridgewater Associates, the world’s largest hedge fund, recently purchased shares of AMC Entertainment.
Reportedly, during this year's first quarter, Bridgewater bought 27,066 shares of AMC stock for a total value of around $667,000. Admittedly, that's pocket change for Bridgewater. Still, it suggests that Dalio and his firm are bullish on AMC Entertainment.
Is it possible that AMC Entertainment is escaping its meme reputation and garnering the attention of serious investors? All in all, a deeper dive into the movie-theater company's recent developments might convince you to invest like Dalio and give AMC Entertainment a try.
| AMC | AMC Entertainment | $11.58 |
It must be acknowledged that AMC stock hasn't had a great 2022, so far. The stock started the year at around $26, but fell to the $13 area not long ago.
Thus, the shares were half-price recently and Dalio's famous firm took a stake. Does this mean it's time for you to pick up a few shares as well? Don't make any hasty decisions, as it's imperative to check AMC Entertainment's financials first.
During the first quarter of 2022, AMC Entertainment generated total revenue of $785.7 million, marking a vast improvement over the $148.3 million from 2021's first quarter. So far, so good.
Turning to the bottom-line results, AMC Entertainment's Q1 2022 net earnings loss of $337.4 million is better than the $567.2 million net loss from the first quarter of 2021. Also, the company's adjusted EBITDA loss of $61.7 million is much more favorable than the year-earlier quarter's $294.7 million adjusted EBITDA loss.
Adding an Ad BusinessAlong with the company's improving financials, prospective investors should be aware of a recent filing. In it, AMC Entertainment discloses a 6.8% stake in National CineMedia < NASDAQ:NCMI>.
To put it simply, National CineMedia displays advertisements to movie theater patrons. If you've sat through ads in a movie theater recently, there's a good chance that they were brought to you by National CineMedia.
AMC stock fell after this stake was disclosed, but that's not an unusual response. Sometimes, cautious/nervous investors sell their shares of a company that has made a sizable purchase or acquisition.
However, this may have been an irrational, negative reaction. Why shouldn't AMC Entertainment invest in the ads that are shown in its theaters? It seems like a reasonable thing for AMC Entertainment to do, though only time will tell whether the National CineMedia stake will pay off.
What You Can Do NowMake no mistake about it: AMC stock could remain volatile for a while. Plus, shaking off the meme-stock reputation won't be easy.
As we've seen, the company's financials are improving, and the investment in National CineMedia could add long-term value. Besides, Dalio's firm invested in AMC Entertainment - and when all is said and done, perhaps you should, too.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content - and crossed the occasional line - on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
AMC shares were trading at $11.80 per share on Monday morning, down $0.23 (-1.91%). Year-to-date, AMC has declined -56.62%, versus a -16.54% rise in the benchmark S&P 500 index during the same period.
About the Author: David Moadel
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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