What do we think about movie theater stock?

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Preface - I don’t know shit.
An idiot friend of mine who thinks he’s E F Hutton (because he has three masters degrees, one of them an MBA, but is honestly a moron) proudly announced that he bought a thousand shares of AMC this morning at $3,25 a share.
I didn’t need to google anything to know that the movie theater industry has been in decline for years. And if there are industries that will face challenges in bouncing back from the current disaster, I think this is one of them.
Thoughts?
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Amish Rabbi

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I have heard theories from smart people that say after the crisis there may be a general surge in eating out, going to movies, ect because of people being shut in and realizing how important the social aspects are to them. So not totally crazy to buy cheap theatre stock. altho if studio stock has also seen a large drop then that might be smarter to buy
 

yone

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I heard it’s the picks that most people don’t think are favorable that are big winners. He might be onto something... I definitely thought the movie industry was going to get taken over by better TVs and streaming services. But what do I know.
 

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Just my thoughts, but when this is all over, paying to sit in a dark room to quietly stare at a screen is definitely on the bottom of my list.
Long term - I’m sure theaters will survive, but I doubt they’ll ever thrive.
 

Beaniman

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I'd be more inclined for things like exxon or airlines right now but I'm no expert by any stretch. I prefer real-estate / rental property.

I have heard rumblings of streamers like Netflix doing theater releases for some time though.

https://www.google.com/amp/s/www.th...oderbergh-laundromat-martin-scorsese-irishman

I'd 110% pay for a weekend pass to binge watch a season of something on the big screen, who knows what the future of theater will be, but it's going to be different I'm sure.
 

DrStrange

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Broken record here: Do your homework. It is a deep dive into the debt structure, cash flow, real estate owned (if any), etc. If it doesn't take hours, you didn't do enough work.

Then you have to make some judgements - how long is this going to last? Are studios going to learn they make more money going straight to pay on demand? Are the customers going to decide they prefer movies on demand? Are the wounded theaters going to be bought out / fire sold? Is the business model going to change? If so , how?

Zero dollars per share is possbile. The old high vs current price is not that meaningful so long as survival is in question.

Action without work is gambling. If you would be ok with $3,000 bet on the come line, then buy a thousand shares cold and hope for the best. You could double your money in a month or two.

If you want to be an investor, do the work first. -=- DrStrange
 

Eloe2000

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I actually took an entire course on the movie exhibition industry during my MBA. The professor was an old film producer. That was a pretty enjoyable and interesting class. In a separate class I researched my term paper on the subject as well.

it’s a declining industry overall and even though Alamo Drafthouse. the one bright spot in the industry, has done well I see it’s opportunities as rather limited. AMC and the other large chains are just dinosaurs allergic to innovation and real change. They are only starting to loosely consider ideas that students in my class thought were obvious 15 years ago.

Other changes like consumer desire for healthier foods are probably hitting just as hard since so much of their profit comes from the snack bar.

I forgot if they own their land or lease it. If the own their land that will be an additional you concerning situation.

The short, medium, and long term outlooks all look distinctly bleak forinternal and external factors. I don’t like it.
 

boltonguy

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How were movie theaters doing prior to corona? Seems like on-demand streaming is crushing that industry - I wouldnt invest in it before the crash ...
 

Eloe2000

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How were movie theaters doing prior to corona? Seems like on-demand streaming is crushing that industry - I wouldnt invest in it before the crash ...


Overall, not good. This chart below is only box office ticket sales which can be misleading because the majority of this money goes to the film distributors based on a split. We don’t know how that theater/distributor split has changed over time. Also it does not include food and beverage whichhas always been a large source of theater profits and also has been an area of possible growth as more theaters now have more complete meals and bars etc.

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Frogzilla

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Preface - I don’t know shit.
An idiot friend of mine who thinks he’s E F Hutton (because he has three masters degrees, one of them an MBA, but is honestly a moron) proudly announced that he bought a thousand shares of AMC this morning at $3,25 a share.
I didn’t need to google anything to know that the movie theater industry has been in decline for years. And if there are industries that will face challenges in bouncing back from the current disaster, I think this is one of them.
Thoughts?
View attachment 431749

Feels like a declining industry. The theaters around here are absolutely fantastic nowadays (super clean with leather recliners and craft beer) but still getting less crowded. I have a great time but it seems those companies are facing an uphill battle, and doesn’t seem likely that all of them will be around in 10 years
 

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Update:
He just posted this. It might help you understand why I think he’s an idiot. He’s a 47 year old man, and this is how he communicates on Facebook:

“ So I lost $900 so far on the AMC stock transaction... ppl are going nuts at home ... u think many would b grateful 2 have xtra time 2 spend w/ their fams ... I'm holding this stock ... even though they announced they hired a legal firm 4 restructuring counsel... I think ppl will b running 2 go 2 the movies ... just 2 get out of the house & have something 2 do ... as soon as it is safe 2 do so.”
 

Coyote

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Zero dollars per share is possbile. The old high vs current price is not that meaningful so long as survival is in question.
This. The the only true bottom is called zero.
And it might be a sticky bottom, not allowing things to bounce up.

Update:
He just posted this. It might help you understand why I think he’s an idiot. He’s a 47 year old man, and this is how he communicates on Facebook:

“ So I lost $900 so far on the AMC stock transaction... ppl are going nuts at home ... u think many would b grateful 2 have xtra time 2 spend w/ their fams ... I'm holding this stock ... even though they announced they hired a legal firm 4 restructuring counsel... I think ppl will b running 2 go 2 the movies ... just 2 get out of the house & have something 2 do ... as soon as it is safe 2 do so.”
If this is a consolation, illiteracy is a world issue.
 

Amish Rabbi

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Update:
He just posted this. It might help you understand why I think he’s an idiot. He’s a 47 year old man, and this is how he communicates on Facebook:

“ So I lost $900 so far on the AMC stock transaction... ppl are going nuts at home ... u think many would b grateful 2 have xtra time 2 spend w/ their fams ... I'm holding this stock ... even though they announced they hired a legal firm 4 restructuring counsel... I think ppl will b running 2 go 2 the movies ... just 2 get out of the house & have something 2 do ... as soon as it is safe 2 do so.”
This makes me sad for colleges and masters degrees
 

Lemonzest

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Most stocks that hit 2 or 3 bucks are more likely to bounce back up to 7 than go to 0. Once this corona craze phases out people will go back to seeing movies in theaters, including me. I wouldn't bank on these guys going out of business I guess is the bottom line.
 

upNdown

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Most stocks that hit 2 or 3 bucks are more likely to bounce back up to 7 than go to 0. Once this corona craze phases out people will go back to seeing movies in theaters, including me. I wouldn't bank on these guys going out of business I guess is the bottom line.
If I had to guess? Yeah sure. But if we're just betting on stocks that will bounce back, I'm thinking there are better choices.
 

Lemonzest

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If I had to guess? Yeah sure. But if we're just betting on stocks that will bounce back, I'm thinking there are better choices.

Agreed, if I am picking stocks and can buy whatever I want then I am looking for something with long term growth potential. The movie theater industry isn't going to trail blaze anything. We know what they do and the price of their stock is pretty predictable by just looking at how they have performed over the last 4-5 years.

I am expecting the US to be worst hit in the next 2 months so I am planning to buy sometime in early June-ish. What stocks do you like?

3M seems like an obvious choice albeit fairly defensive as I don't think their price will go through the roof but they also won't sustain huge losses either. Their products will remain in demand over the next 3 years as everyone continues to be vigilant with masks. They also make many other products which are considered staples that people just need, adhesives, chemicals, automotive stuff etc.

Apple isn't a stock I am interested in at all as it is my gut feeling their best days are behind them with product design and innovation.

Tesla is interesting and I do want to own some of their stock if I can get a good price. If the price ever goes down to around 300 I am a buyer. I feel they have crossed the threshold and are here to stay with building significant infrastructure to support their cars. I do think in general though that their stock is way overpriced relative to their profits.

I am still trying to think of other stocks that I actually want to own that perhaps have taken a beating over the last few months.
 

Frogzilla

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This makes me sad for colleges and masters degrees

In my limited experience, generic 2nd degrees are quite polarized...some smart educated people who wanted to get an MBA to network, but also people who had trouble getting/keeping a job in their desired field. 3 degrees, well what kind of life circumstances motivates a person with 2 degrees to go back to buy a 3rd? This guy has 4....
 

One Eyed Dollar

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The one finance class I had in college was Engineering Economics. Nobody in the dept. wanted to teach it, so they took turns drawing the shortest straw. The professor I had was basically reading the textbook a couple days ahead of us and regurgitating it. One of the other students was really fed up with him, and one day after he couldn't answer a simple question she called him out and said "don't you have an MBA??" His face, oh man. A year or two after that he quit teaching.
 

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my econ course they brought in someone from the business department rather than have anything in the design department teach it lol
 

slisk250

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Buy index funds and forget you have them for the next 15 years

Yeah, I've got a nice deal at the oil company I work for. They match 9% of my pay straight into Vanguard Index funds that I can move around in. They really did well once things improved after 2008 (I started in 2007). I've felt there would be a big drop in the market for a long time so started moving a bunch of cash into "The Chicken Fund" which is only available to employees (no risk or gains on it)...I'm waiting until this bottoms out before moving it back in. I'm curious what the bottom Dow could be by July...15K?...maybe even 10K? Who knows? Dark times are coming and I'm ready.
 

colter ripton

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i have been buying a few stocks. i am a complete novice at it though. Basically i have been buying stocks that have lost alot of value, but i am almost certain will not go out of business. Disney is an example of this. Down from 150ish this year to around 95 a share right now. Its not going to set the world on fire, but im am pretty certain disney isnt going anywhere. If it takes a while to come back up i am completley fine with that.

I have been staying away from the airlines, cruise companies, etc that i think will take a long time to recover. (if they ever do). I would put movie theaters in that same category. (not sure if or when they will recover)

I am trying to do research before I buy, but there is so much conflicting information out there that i basically am just looking for good value in companies that i am 99.9% sure will not go out of business. When the stocks rebound, (and i have no idea how long that will take) I think there could be some good profit in it.

I am also doing a few smaller buys (like really small 100 dollars ish each) on some that i think could go up alot. This is just pure gambling though,even though i have put alot more research into these than the others. They are still very risky and i understand that they could go broke.
 

DrStrange

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From the business wires late on 04/02/2020. I did not bother to check the accuracy of this - that seems like a good job for someone considering investing in AMC. People make up lies in environments like this and dump them on the unsuspecting public to panic investors one way or the other - - - do your damn homework or get your leg ripped off by the sharks.

S&P Global on Thursday downgraded its credit rating for AMC Entertainment to CCC- from B, which takes the company from “Highly speculative” to “Default imminent, with little prospect for recovery.”

Who ever has been buying this "bargain" stock should consider taking their losses and sell it. After doing the research to verify the S&P rate cut is true of course. Default imminent is not a good sign for the equity holders.

If you just can't help yourself, the bonds would be a better risk vehicle. But the transaction costs could be shocking. And you are likely looking at tens of thousands of dollars to play with the bonds. Though truth is, if you didn't already think of that trade you should not be doing it.
 

upNdown

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From the business wires late on 04/02/2020. I did not bother to check the accuracy of this - that seems like a good job for someone considering investing in AMC. People make up lies in environments like this and dump them on the unsuspecting public to panic investors one way or the other - - - do your damn homework or get your leg ripped off by the sharks.

S&P Global on Thursday downgraded its credit rating for AMC Entertainment to CCC- from B, which takes the company from “Highly speculative” to “Default imminent, with little prospect for recovery.”

Who ever has been buying this "bargain" stock should consider taking their losses and sell it. After doing the research to verify the S&P rate cut is true of course. Default imminent is not a good sign for the equity holders.

If you just can't help yourself, the bonds would be a better risk vehicle. But the transaction costs could be shocking. And you are likely looking at tens of thousands of dollars to play with the bonds. Though truth is, if you didn't already think of that trade you should not be doing it.
No I never considered it. A friend did, and it seemed like a bad idea to me. Apparently it was
 

K ALL IN 9

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I think since a lot of people are cutting back on non essential activities because people are out of work and possibly trying to save money (and force government shutdowns/restrictions), habits are changing. After a while, not doing those things will become the new norm for them. A person that would normally go to the theater to see a new movie they're interested in in the past might wait until it comes out on DVD because they've become accustomed to no being able to go to a theater on opening day.

People will be adopting (or already have been) a new way of life and see that things are better or haven't changed at all since cutting out certain aspects of their normal routine and I believe will have an effect on certain industries.
 

Silv3rDawg23

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I would stay clear of movie theater stocks. I am not a stock guy, but I believe the epidemic is causing a lot of "excess spending" habits to be on the decline, which then causes businesses to close (if not forcibly shut down by state law).

I feel awful for the workers that were laid off as a result of failing/closed businesses.
 

mummel

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I’m a big movie fan. I follow the industry because I’m very interested in it.

I would be surprised AMC is even called AMC after this. It’s 100% going bankrupt IMO. They had massive amounts of debt before this crisis started.

Sorry but this one is a bust.
 
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