AMC Plummets Despite Multi-Million Dollar Sale

The equity is down over 47% year-over-year

Digital Content Manager
Aug 31, 2020 at 12:50 PM
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The shares of AMC Entertainment Holdings Inc (NYSE: AMC) are down 6.2% at $5.91 at last check, after earlier announcing the sale of nine movie theater locations in the Baltic region of Latvia, Lithuania, and Estonia for roughly $77 million. Despite the negative price action, the company earned a price target hike from Wedbush to $7 from $4 this morning. 

The stock has had a rocky past couple of months. After shares dropped to an all-time-low of $1.95 on April 13, the security rallied back up to the $7 mark in July, only to fall again a couple of weeks later. Now, shares seem to be going down a very similar trajectory, testing support at the 10-day moving average after hitting that same $7 mark a few days ago. Longer term,  AMC stock continues to struggle, and is down 46.8% year-over-year.

AMC

Analysts are skeptical of the security, with eight of the 10 in coverage sporting a tepid "hold," and two carrying a "strong sell" rating. Plus, the 12-month consensus price target of $3.50 is a whopping 40.8% discount to current levels. Meanwhile, short interest is down 3.7% in the last two reporting periods, but the 16.95 million shares sold short still account for 32.6% of the stock's available float, or nearly three days' worth of pent-up buying power.

That pessimism is not echoed in the options pits, where calls are all the rage. AMC sports a 10-day call/put volume ratio of 5.58 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 86th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

Traders looking to speculate on AMC's near-term trajectory should consider options. The stock's Schaeffer's Volatility Index (SVI) of 120% is in the 14th percentile of its annual range, suggesting short-term options are pricing in relatively low volatility expectations. In other words, the stock's near-term options are attractively priced at the moment.


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