Why AMC Stock Dropped Tuesday

Motley Fool2021-03-24

The movie industry is changing -- and the theater chains might be in jeopardy.

What happened

Shares of AMC Entertainment (NYSE:AMC) plunged nearly 15% Tuesday after Walt Disney(NYSE:DIS) said it would make two of its most-awaited movies available for viewing on its streaming service the same day they begin showing in theaters.

So what

For a fee of $29.99, Disney+ subscribers will be able to watch Marvel's latest superhero blockbuster,Black Widow, starring Scarlett Johansson, on July 9 -- the same day it debuts in theaters. Disney will use a similar launch approach withCruella,a live-action film based on the villain from its classic hit,101 Dalmatians.

BLOCKBUSTER RELEASES ON STREAMING SERVICES COULD MAKE IT DIFFICULT FOR AMC ENTERTAINMENT TO FILL ITS THEATERS. IMAGE SOURCE: GETTY IMAGES.

The news came as a punch to the gut for AMC and its shareholders. The struggling theater chain recently announced that 99% of its U.S. locations would reopen by March 26. Yet with Disney making it easy for movie fans to watch its biggest films in the comfort and safety of their own homes during the COVID-19 pandemic, AMC might struggle to fill seats.

Now what

In addition to what will likely be significantly lower traffic levels, AMC will incur higher coronavirus-related costs. The theater chain has promised to strengthen its cleaning and safety protocols during the health crisis. These added expenses will further pressure AMC's profitability. That's not good for a company that was already struggling to generate consistent profits even before the pandemic began.

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Comments

  • Samuel20488
    2021-03-25
    Samuel20488
    If you are holding, sell covered calls to lower your cost basis
  • FFIE拿十年
    2021-03-25
    FFIE拿十年
    一直在做空,這就不一樣了!
  • HunterZ
    2021-03-24
    HunterZ
    叫買的都是託,能跑趕緊跑吧,我已經深套了
  • BlackJesus
    2021-03-24
    BlackJesus
    Hahahahaa. Motley fools articles always gives me a good laugh. I feel alot better about myself after reading about articles that comes up with the dumbest shit 
  • Daveb
    2021-03-24
    Daveb
    I have learnt not to listen or take heed of anything that comes from Motley Fool. Their name says it all. They under estimate that Americans love oicture theatre experience and dining out. Bla bla bka ??. Drop had nothing to do with Disney and everything to do with short sellers. AMC will rebound.
  • Ovaline
    2021-03-24
    Ovaline
    Nice dip to buy
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