Maybe a superhero could come to the rescue of AMC stock (AMC) – Get AMC Entertainment Holdings Inc. Class A Report. After shares dipped sharply in the last several weeks, by 48% from the November peak to the December trough, Spider-Man could help to support bullish momentum seen in the past few trading days.
The latest movie featuring your friendly neighborhood hero blew expectations at the box office. During the weekend of December 17, “Spider-Man: No Way Home” raked in over $250 million in revenues — the third largest opening in history. Box office numbers like this weekend’s have not been witnessed since April 2019, when “Avengers: Endgame” was released.
(Read more from Wall Street Memes:Why Betting Against AMC Stock Is Still a Bad Idea)
Spider-Man and AMC: it’s about the buzz
There is a good chance that the latest Spider-Man movie will help to greatly improve AMC’s attendance and revenues in the fourth quarter. Keep in mind, from Q3 earnings day, that AMC’s October attendance reached 70% of 2019 levels. Could Spider-Man single-handedly push December’s numbers above 100%?
But at Wall Street Memes, we have often emphasized that AMC stock does not generally trade on business fundamentals. Ask any member of the “ape community” of retail investor HODLers, and they will likely agree.
In our view, rather than through improved operating and P&L metrics, Spider-Man could help by putting AMC at the center of the discussion once again. Generally, buzz and popularity are key ingredients pushing AMC share price higher. And AMC is now the second most popular ticker on Reddit, after being ranked 9th only about three days ago. See chart below.
But how about the market?
One concern for AMC holders is the current state of the stock market. The S&P 500 has sold off recently on the back of (1) Omicron fears, (2) a more hawkish Fed and (3) higher inflation and interest rates taking a toll on high-valuation stocks. Shouldn’t AMC stock suffer from broad-market bearishness as well?
But here is when shares of the movie theater operator can shine. Back in August, we explained how AMC stock could serve as a market hedge. We explained further:
“AMC has a negative beta: -4.2. […] This is a feature of AMC specifically, probably due to its meme status and the unique forces that move the share price, and not at all something that is shared across the entertainment sector.”
Most stocks are correlated with the broad market at a factor of +0.8 or +0.9. But AMC’s correlation factor is a much lower -0.15. A negative correlation number, in fact, suggests that AMC often moves higher when the market heads lower — and vice versa.
On the back of recent bullish momentum and strong box office numbers, could now prove to be a great time to hold AMC, especially if the S&P 500 spins its wheels or dips further?
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Wall Street Memes)