AMC Entertainment (AMC) experienced a huge gain earlier this year following the return of Keith “Roaring Kitty” Gill. On May 13, AMC stock jumped 78% in a single session. Shares also roared another 32% the next day, hitting as high as 11.88. Since then, the stock has fallen 19% in the last three months.
AMC is currently trading over 4.200 in the afternoon trading hours. However, it is on pace to register a fifth straight weekly loss. Since its surge in May, it appears that stock in the movie theater has bottomed. However, some glass-half-full financial experts may see this as a good thing. The infamous “buy the low” mantra may apply to AMC, which has shown signs of volatility over the last few months. Would it be wise to buy the dip on shares now, or are they in danger of plunging even lower? Let’s analyze how AMC stock will perform in the near and distant future.
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What is Stopping AMC Stock from Booming?
Source: cnbc.com
Since the pandemic, many movie theaters have found it challenging to get back on track to pre-pandemic sales numbers. The rise of streaming platforms like Netflix; Hulu and Disney Plus have done theaters no favors. Thus, with fewer people flocking on premiere day to the movies and waiting for streaming releases instead: AMC stock has typically had a down few years.
Only when huge box-office events occur, or a wave of buys occurs thanks to the likes of a Roaring Kitty, has AMC stock flourished of late. Looking at the numbers in 2024, AMC is now down more than 33% for the year. Stock value fell 9% in August, but the stock market experienced extra-high volatility that month.
What truly prohibits AMC from booming in value is its reputation as a “meme stock.” Its attachment to Roaring Kitty stops many investors from taking shares in the movie theater business seriously.
Could The Stock Rebound as 2024 Reaches Its Final Months?
Strong future profits or improving cash flow could lead to increasing accumulation of AMC by large funds and other institutional investors. A powerful rebound could force short sellers to cover their positions, helping to propel shares even higher.
However, AMC stocks appear to be weakening in terms of its Relative Strength Index, ranking low compared to other top companies. In early August last year, AMC held a very respectable 96 Relative Strength Rating. This score means AMC stock had outperformed 96% of all stocks in the IBD database over the past 12 months. On the other hand, that rating has fallen to a score of 15 at the same time this year.
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Furthermore, AMC has yet to show more signs of bottoming out, indicating that the stock could fall more. You don’t want to buy a dip that has the potential to dip further. Thus, making a move on AMC could be a risky play, unless you’re aware of Roaring Kitty coming around to spook short investors around Halloween.
