AMC Theaters may stick around despite a devastating year of financial hardship, thanks to the recent changes in the stock market caused by savvy Redditors. Movie theaters have struggled for the past decade due to the rise in streaming services but have ultimately held out thanks to major releases and a steady enough fanbase that still wants the movie experience. The coronavirus pandemic changed that by forcing theaters to shutdown, catalyzing existing trends in favor of streamable content. Even after theaters reopened, people were still hesitant to go out in public, especially to an enclosed space such as the movies. As recent as this Monday, AMC was on the brink of going out of business until a $1 billion fundraiser saved them.
AMC is undoubtedly not the only corporation that has struggled thanks to technological advancements in recent years. Theaters have had to compete with streaming, but print media has declined due to online news outlets. Department stores have struggled to keep up with Amazon, and retailers such as GameStop have had to close locations thanks to platforms like Steam. Things changed when GameStop saw a massive upswing after Reddit users of r/WallStreetBets saw an investment opportunity in the company's stock after hedge fund firms pooled money to bury GameStop. People on this message board bought numerous stocks, causing the shares' value to drastically increase, leading to more money in these new shareholders' pockets.
The news focused on GameStop as their stocks saw the most substantial change. That said, they are far from the only company to see market changes lately – AMC stock went up 300% on Wednesday due to the same buzz on Reddit. Per Matt Levine, a finance and opinion columnist for Bloomberg, these recent events may have saved the company:
Yesterday, holders of $600 million of AMC convertible bonds converted them into stock at a conversion price of $13.51 per share. Six hundred million dollars of debt, vaporized by Reddit enthusiasm... A week ago it was not crazy to think this company was doomed; now it is entirely possible that it will survive and thrive and show movies in movie theaters for decades to come because everyone went nuts and bought meme stocks this week.
This movie theater revival is undoubtedly good news, as celebrities such as Tom Hanks have noted that the experience of going to see a film in a theater is unique and still sought after. While streaming has lead to more content that is easily accessible (for those who can front the subscription prices), there is no denying the movie theater experience is hard to replicate at home. Some households are too hectic to focus entirely on the movie. Many people cannot afford a screen as large as a wall to captivate and excite those watching. Moreover, many people go to the movies for the community aspect the theater provides. With AMC getting this chance to continue, this unique experience can be maintained.
It's worth noting that the stock market is extremely vulnerable to sudden change, meaning this positive upswing could be temporary. Furthermore, stock value is vital for a business. Still, customers must frequent an establishment for it to survive – hopefully, this can happen again soon with the vaccine's rollout. In short, many variables are affecting whether or not people can go to the movies. But for right now, people can take comfort in knowing that AMC appears to be saved.
Source: Bloomberg
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January 29, 2021 at 05:44AM
