Differences between Investing vs Trading
Differences between Investing vs Trading
AMC Entertainment Holdings is the planet’s biggest movie theatre chain. They are based in Kansas, in the US, but also have numerous theatres in Europe and other parts of the planet. The history of this group can be traced back to 1920, when Maurice, Edward, and Barney Dubinsky formed AMC theatres. However, multiple name changes, acquisitions, and takeovers have taken place since then.
They moved into drive-in movie theatres in the 1940s before gradually increasing their portfolio of locations all over the US. In addition, AMC helped to pioneer the multiplex and megaplex concepts, allowing them to greatly increase their revenue by offering movies on several screens at the same time in a single location without needing to hire more staff.
By the 1980s, AMC had moved into the UK market and currently they have a strong presence in Europe and the Middle East, as well as their long-standing presence in the US.
The AMC and GME 2022 robinhood scandal refers to the events surrounding the sudden halting of trading of certain stocks by the Robinhood app. The stocks in question, AMC and GME, were both highly volatile, with AMC seeing a 1400% increase in value and GME seeing a 700% increase. Robinhood halted trading of these stocks, citing concerns about market volatility. This caused an uproar among users of the app, many of whom accused Robinhood of engaging in market manipulation. The scandal escalated when it was revealed that Robinhood had received billions of dollars in payments from hedge funds in exchange for halting trading.
A look back at the historic AMC share price (traded as AMC on the NYSE) shows a high level of volatility, driven by diverse factors such as rising and falling demand for movie theatres. The arrival of on-demand streaming services has put pressure on this industry, although their sales figures suggest that the public is still hugely attracted to blockbuster movies in this setting.
An example of the volatility can be seen in the AMC share activity at the start of 2021. Having secured $917 million in fresh funding to help them face the future, AMC stock was subjected to a short squeeze that led to its price shooting up by 300% before falling again.
Market conditions and potential innovations will be crucial in determining their future share value. The company has announced interesting steps such as accepting Bitcoin and other cryptocurrencies, as well as adding music concerts and sports to its business model for increased diversification.
AMC Entertainment stock typically doesn’t pay dividends to shareholders and has shown a strong tendency for price swings in the past. Therefore, the type of investor who buys AMC shares is likely to be someone looking to gain from the volatility of the stock rather than build up safe and steady profits.
Given the changing face of the entertainment industry and the track record of AMC stock, buying the underlying asset is an option that could lead to your investment fluctuating widely. Those investors who prefer a steadier return may opt to trade in a mutual fund or ETF that includes this company among its elements.
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* The spreads provided are a reflection of the time-weighted average. Though Skilling attempts to provide competitive spreads during all trading hours, clients should note that these may vary and are susceptible to underlying market conditions. The above is provided for indicative purposes only. Clients are advised to check important news announcements on our Economic Calendar, which may result in the widening of spreads, amongst other instances.
The above spreads are applicable under normal trading conditions. Skilling has the right to amend the above spreads according to market conditions as per the 'Terms and Conditions'.
Are AMC shares a good investment?
AMC has been one of the most volatile stocks on the market in recent months, making it a risky investment for short-term investors. However, AMC shares have also shown consistent growth over the past year, and analysts believe that the company has strong long-term prospects. AMC is a leading entertainment company, and its shares are currently trading at a discount. The company has strong fundamentals, and its stock is expected to recover in the long run. As such, AMC shares may be a good investment for investors who are willing to hold onto them for the long term.
Who owns most AMC shares?
AMC is a publicly traded company, and as such, its shares are owned by a variety of people and institutions. The largest AMC shareholder is Dalian Wanda Group, a Chinese conglomerate that owns approximately 20% of the company. Other major AMC shareholders include Fidelity Investments, BlackRock, Vanguard Group, and JP Morgan Chase. Together, these institutions own nearly 50% of AMC shares. The remaining shares are owned by smaller investors, including individual stockholders and smaller institutional investors.
Do AMC shares pay dividends?
AMC does not pay dividends to its shareholders. AMC's stock is bought and sold on exchanges, and investors may trade AMC shares through a broker. AMC is not required to pay dividends, and it has chosen not to do so in the past. However, AMC may choose to pay dividends in the future, and investors should check AMC's website or contact a broker for more information.
What was the AMC short squeeze in 2021?
AMC shares exploded in value in early 2021 after a short squeeze was initiated by retail investors on Reddit. The company, along with GameStop (GME) and other companies that had been targeted by hedge funds for short selling, saw their stock prices increase dramatically as retail investors bought up shares and forced the hedge funds to cover their positions.
The AMC short squeeze was notable not only for its size and scope, but also for the fact that it was driven entirely by retail investors using platforms like Robinhood.
Which are the competitors of AMC shares?
AMC is the world's largest movie theater chain, with over 1,000 locations across the United States. However, AMC is not without its competitors. The two largest competitors in the movie theater industry are Regal Entertainment Group and Cinemark Holdings. Both of these companies are publicly traded, and AMC shares have been under pressure in recent years as investors worry about the future of the movie theater industry.
The company has responded to these concerns by investing in new technologies such as IMAX screens and reserve seating. AMC has also been working to improve the customer experience by making it easier to buy tickets online and introducing more comfortable seats. However, it will need to continue to innovate if it wants to stay ahead of its competitors in the years to come.
Time for a new meme bull market in AMC?
The dynamics are very different now. AMC as a company has been entirely transformed since the pandemic. The business was re-collateralised via massive stock sales and convertible bonds that were converted to equity during the memestock mania.
AMC subsequently ran out of common stock to sell, so they got creative and issued APE’s, or AMC Preferred Equity Units.
The idea was that the two unit types would be economically equivalent and eventually convert back to common stock, but APE continues to trade at a deep discount to AMC.
Will APE’s drive the price of AMC lower?
There’s little doubt that this decision will lead to shareholder dilution as long as the amendment passes to convert APE’s into common stock. It has passed the shareholder vote but remains subject to legal challenges in a Delaware court. According to Bloomberg’s Matt Levine, once the amendment is completed:
AMC will have 550 million authorized common shares (up slightly from the current 524 million), but, because of the reverse split, it will only have about 145 million outstanding (roughly 52 million from the old common shares and roughly 93 million from the conversion of the APEs). So it will have lots more room to issue lots more shares.
Approximately a quarter of the outstanding APE’s are owned by the Antara Capital hedge fund who may decide to convert their APE holdings into AMC shares and exit the investment.
Is AMC profitable?
No. The company needs to keep raising capital precisely because the cash burn is high. Sustained profitability was out of reach throughout 2022, when the company reported a loss of $973.6 million, a slight improvement on the $1,269.8 million loss for 2021.
AMC needs to sell a LOT of tickets and popcorn to make up the profit shortfall.
Will AMC go bankrupt?
Bankruptcy is a serious possibility for the movie theatre chain. Rival Cineworld filed for Chapter 11 bankruptcy late in 2022, and the resulting restructuring plan “does not provide for any recovery for holders of Cineworld’s existing equity interests”, wiping out existing shareholders.
AMC carries a debt load of over $5 billion and due to the financial position of the business, cheap financing is not an option. As interest costs increase, the company is at risk of becoming a zombie, existing only to service the interest costs of debt.
As the economy slows and interest rates rise, it seems unlikely that Internet white knights will ride to AMC’s rescue a second time. Further dilution and/or a complete restructuring seems inevitable unless the company can somehow pull off a miracle. Drastically cut costs or increase revenues despite the multi-decade declining trend in movie theatre ticket sales.
Why Trade [[data.name]]
Make the most of price fluctuations - no matter what direction the price swings and without capital restrictions that come with buying the underlying asset.