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Earnings Day Matters for AMC Even If Its Actual Results Don’t

  • AMC shares have rallied after each of its last six reports
  • ‘Impossible for me to know’ what retail will do next: Analyst
New York City Movie Theaters Reopen Following Yearlong Closures
Photographer: Amir Hamja/Bloomberg
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It’s been a cruel summer for the self-described “apes” who make up the diehard shareholder base of the movie-theater chain AMC Entertainment Inc. and joined forces to drive its stock to heights that Wall Street analysts consider absurd. Its earnings report later on Monday may offer at least some short-term relief.

The stock has rallied in the trading session that followed each of its last six earnings reports, notching an average one-day gain of almost 7%, even though it only posted a profit once in those quarters and missed Wall Street’s average earnings estimate in four of them.

Yet the gains may not last. If the professional securities analysts are in the right ballpark, more pain is in store over the longer term: The average price target calls for a further 82% drop to $5.87 in the next 12 months. None of the 10 who cover the company recommends buying the shares.

AMC is already down almost 50% from its peak at the beginning of June, testing the faith of the army of retail traders who hope to send it “to the moon” -- and in the process burn the hedge fund short-sellers like Odey Asset Management that are reportedly betting against the shares.

Of course in the era of meme stocks, the wall of cash thrown around by social-media mobs can render basic measures of value essentially meaningless, making the predictions of professional analysts nearly as dubious as the wild conspiracy theories coming from the apes trying to pump up AMC’s shares. Consider the average 12-month Wall Street price target for the stock a year ago: $3.50, or about one-tenth of what it’s trading for these days, and one-twentieth of what it peaked at in early June.