Movie Theater Stock Surges Despite Q1 Results

Year-over-year, AMC is already up over 140%

Digital Content Manager
May 7, 2021 at 10:48 AM
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The shares of AMC Entertainment Holdings Inc (NYSE:AMC) are up 7.4% to trade at $9.67 this morning, despite the movie theater name reporting wider-than-expected first-quarter losses of $1.42 per share. And though the company's revenue also missed estimates, AMC said business is expected to improve over the next few months, as people return to cinemas amid ramped up Covid-19 vaccinations and new releases such as "Fast & Furious" and Marvel's "Black Widow."

The stock has had a volatile run on the charts as of late. After surging all the way to a Jan. 27, roughly two-year high of $20.36, shares came crashing down to find a floor at the $5.50 level. Over the last month, the security has struggled with overhead pressure at the $12 mark, while the 80-day moving average remains as a solid source of support. Year-over-year, AMC has added over 140%.

The brokerage bunch is pessimistic towards the equity, with three of the four analysts in coverage carrying a tepid "hold" or worse rating. Plus, the 12-month consensus target price of $4.44 is a 53.7% discount to current levels. In other words, AMC may be overdue for a round of upgrades and/or price-target hikes. 

Short sellers echo that bearish sentiment. Short interest rose 90.4% over the last two reporting periods, and the 93.89 million shares sold short make up a whopping 180.3% of the stock's available float. Should some of this pessimism begin to unwind, AMC could surge higher still.

Now seems like a great opportunity to weigh in on AMC Entertainment stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 142% sits in the low 12th percentile of its annual range, indicating options players are now pricing in low volatility expectations.

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) sits at 92 out of 100. This means AMC has managed to exceed volatility expectations during the past year -- a boon for option buyers.

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