How to Buy AMC Stock: Invest in the Biggest Movie Chain
AMC (NYSE: AMC) is the largest movie chain in the world, with more than 2,800 screens in Europe and nearly 8,000 in the United States.
As one of the major players in the entertainment industry, the company is often attractive to investors.
If you’re interested in investing in AMC, here’s what you need to know.
How to Buy AMC Shares
If you’re still interested in buying shares in AMC after you’ve done your due diligence, the first thing you’ll need to do is a brokerage account.
You'll need a brokerage account
Brokerage companies help people invest in stocks, bonds, and other securities through their brokerage accounts.
There are many brokerage companies out there, each with its pros and cons.
Some companies, like Vanguard and Fidelity, offer brokerage accounts and operate their own line of mutual funds.
If you invest in the funds offered by your brokerage you often can get perks like commission-free trades or better customer service.
Once you’ve chosen a brokerage to work with, you have to open an account.
That typically means filling out an application, providing some identifying information, and linking a bank account that you can use to fund your brokerage account.
Place a buy order
Once you’ve opened and funded your account, you’re ready to buy some stocks. To buy shares, you need to submit a buy order.
There are two common types of buy orders you can use.
Market orders only require that you specify how many shares you want to buy.
Your brokerage will buy those shares at the lowest possible price. You’re all but guaranteed to buy the shares you want, but might spend more than expected, especially with less popular businesses.
Market orders are simpler to place but can be unpredictable. You’ll buy shares at the cheapest available price, even if that price is far higher than you expect to pay. This can often happen if you’re buying shares in companies that are not frequently traded.
With a market-limit order, you specify the number of shares to buy and the highest price you’re willing to pay for each share.
Your broker will buy the shares if they are available below your maximum price. If the shares are priced higher than your limit, your broker won’t buy the shares.
Buy-limit orders are generally safer because you won’t accidentally pay more than expected for a stock. However, there’s always the chance you won’t buy any shares, which means you could miss out on gains if the stock is rising in value quickly.
AMC Entertainment Holdings, Inc (also known as AMC Theaters, ticker symbol: AMC) is an American movie theater company that has more screens than any other theater chain in the world.
Founded in 1920 as Dubinksy Bros., the company has grown and expanded, acquiring many other theater companies over the past century.
AMC primarily makes money through ticket and concession sales.
It offers many premium theater formats including Dolby Cinema and IMAX theaters. It also operates AMC Independent, a film distribution program for independent films.
Research and Analysis
Whenever you’re considering an investment, you should take the time to do your due diligence and research the opportunity.
For an individual stock, that means researching the company and the part of the market it operates in.
One common strategy for researching an investment is called fundamental analysis.
Fundamental analysts look at things like a business’s revenues, expenses, debt, profits, and cash flow. They use these numbers to arrive at a fair value for the stock and try to buy stocks when they trade below their calculated fair market value.
Fundamental analysts also often look at competing businesses and compare them to identify strengths, weaknesses, and whether the company they want to invest in is threatened by the competition.
Some of AMC’s top competition includes:
- Regal Cinemas (a subsidiary of Cineworld, ticker symbol: CNE)
- Cineplex (ticker symbol: CGX)
- Cinemark (ticker symbol: CNK
Another strategy that some investors employ is called technical analysis.
These investors examine stock price charts and try to identify specific patterns or signals. Technical analysts believe that the patterns they identify can indicate whether a stock’s price is going to rise or fall.
Keep in mind:
Even if fundamental or technical analysis for a company is positive, there is no guarantee that an investment will succeed.
The company could fail to take advantage of its opportunities, fall foul of bad luck, or be overtaken by a competitor.
When you invest in anything, you’re taking on some risk. Investing in a single company can increase that risk.
If the company succeeds, you’ll likely turn a profit. However, if the company stagnates or worse, you’ll likely lose money.
Each company relies on its ability to maintain or increase its customer base and revenues through offering new, desired products and services. Companies that don’t have anything to sell won’t be able to bring in cash and keep their business running.
For AMC, that means continuing to show new and exciting movies in theaters or convincing customers to come to theaters for other events.
One major risk facing AMC is the rise of streaming.
During the COVID-19 pandemic, many movie makers turned to streaming to distribute films directly to people’s homes.
If this trend continues, AMC may have fewer films that are shown exclusively in movie theaters and will have to compete with the comfort and convenience of viewing a movie at home instead of traveling to a theater and watching a film with strangers.
As recently as the start of 2021 AMC feared that it was heading for bankruptcy due to the financial struggles brought on by COVID-19 and the shutdown of almost all of its theaters.
In January 2021, the company raised more than $900 million from investors which helped give it the cash it needed to avoid bankruptcy.
CEO Adam Aron stated that the cash infusion took “any talk on imminent bankruptcy for AMC” off the table.
However, if the company burns through that cash and theatergoers don’t return in large numbers of the pandemic continues for longer than expected it could lead to future financial struggles for the business.
Other Ways to Invest in Movies and Entertainment
Buying shares in a single company is one of the more exciting ways to invest, especially if you’re already a fan of a company and its products.
If you have some skin in the game, it’ll be more fun to watch the news and follow the company’s success and setbacks.
However, the risk of investing in one business is significant.
One of the best ways to reduce risk when investing is by building a diversified portfolio that holds shares in many different companies.
This way, if one company performs poorly you have other stocks that can pick up the slack.
The easy way to diversify your portfolio is to buy shares in a mutual fund or ETF. These funds hold shares in hundreds or thousands of businesses, giving you a simple way to diversify.
Various funds may focus on the entertainment sector and be comprised of just those stocks for this specific industry (including AMC and its competitors).
If you want to make sure that some of your investment goes toward a specific stock, such as AMC, you can read the fund’s disclosures to make sure that it holds the company you’re interested in.
Consult an Advisor
Whenever you invest, you’re accepting some level of risk. You can lose money even with a well-diversified portfolio.
However, buying shares in just one company is a highly risky investing strategy, even if it's exciting.
In general, the safer approach is to keep investments in individual businesses to a small portion of your portfolio, leaving the majority of your money in diversified mutual funds.
Consulting with an advisor to help you make good investing decisions is a good way to make sure you don’t risk too much of your portfolio on high-risk stocks.
As with all investing, you are putting your money at risk, so only invest money you can afford to lose.