Why AMC Stock Popped Today

What happened

Shares of movie theater chain AMC Entertainment Holdings (NYSE:AMC) climbed 3.4% through 3 p.m. EDT Monday after the state of New York announced it will soon increase allowed capacity in its movie theaters by 50%.

As Deadline.com reported this afternoon, New York’s new COVID-19 safety guidelines will permit theaters to increase capacity from 25% (currently) to 33% (effective April 26), about a 50% increase.

Small audience cheering in a movie theater

Image source: Getty Images.

So what

This may be only the beginning. With the summer movie season fast approaching, the New York chapter of the National Association of Theatre Owners is asking the governor to continue raising movie theater capacity limits, hoping to get to 50% capacity by Memorial Day (May 31) and then to 75% by July 4 — “in time for the rollouts of major tentpoles like CruellaA Quiet Place 2F9 and Black Widow.

Elsewhere, California has raised the idea of permitting theaters to resume operating at full capacity by mid-June.

Now what

Deadline notes that New York isn’t ready to go that far just yet, adopting “a more gradual approach” to reopening instead. But AMC says it can operate profitably even at only partial capacity. For the time being, analysts continue to forecast losses for AMC — both this year and next year as well.

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Starting next week, AMC will get its chance to prove them wrong.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/04/19/why-amc-stock-popped-today/

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