Introduction
The theater industry has been struggling for years now and AMC stock has been no exception. In fact, the past few months have been particularly bad for AMC stock prices as the company’s 2020 low set back in September. That low came on the heels of poor Q3 earnings results and an even worse outlook for 2020. But will things get better for AMC stock, or will they continue to get worse?
AMC stock prices had risen over the past few weeks in anticipation of the “Netflix Effect”.
AMC stock prices had risen over the past few weeks in anticipation of the “Netflix Effect”. The Netflix effect is an industry term that refers to the tendency for movies to perform better at theaters when they are shown on streaming services like Netflix (NFLX), Amazon Prime Video (AMZN), and Hulu. This has been proven with studios like Lionsgate, who have released some of their new releases on Netflix first. The result has been that their box office sales have increased as a result of this strategy.
This means that AMC will benefit from any future releases on these platforms because it will increase foot traffic at their cinemas and therefore boost profits for them as well!
The “Netflix effect” was expected to help AMC stock rebound from its 2020 lows, which came on the back of difficult year for theaters.
The “Netflix effect” was expected to help AMC stock rebound from its 2020 lows, which came on the back of difficult year for theaters. Theaters have been struggling for a while, and it's not just because audiences are streaming movies at home. They're also losing customers to home theaters and other newer ways of watching movies.
But theater owners needn't worry about those losses too much right now — they're coming up short in another area: profits but that may be changing soon thanks to Netflix.
AMC stock was also supposed to get a boost from the company’s own coming streaming service, AMC+.
AMC's streaming service, AMC+, is set to launch in 2020. The service will be available to all AMC theaters in the US and will cost $8.99 per month for non-members and free for members, who pay around $14 monthly anyway. The service was supposed to give a boost to AMC stock by providing increased viewership and earnings across the board, but after some less-than-enthusiastic initial reviews of its first show, "The Passage," it's unclear how successful this venture will be.
If that doesn’t happen, then things could get even worse for AMC stock.
If that doesn’t happen, then things could get even worse for AMC stock.
The company could continue to fall as it did in April. That's something that we already know happened with the selloff over the past few days—and it's something that can happen again if there isn't a rebound soon.
It's also possible that AMC will fall even further than its current levels, which would mean new lows for the stock. This is certainly possible given how much selling has taken place in recent days and how volatile AMC’s share price has been lately; however, this might not happen until next year since there are still several months left in 2019 (and 2020).
If this leads to a sell off in AMC stock, then that would be another impediment to the company’s recovery.
If this leads to a sell off in AMC stock, then that would be another impediment to the company’s recovery.
AMC stock fell from $10.00 to $7.00 and has fallen more than 50% in the past year.
But if consumers find it more convenient than driving to their local theater and waiting in line, then that could lead to a rebound in AMC stock.
But if consumers find it more convenient than driving to their local theater and waiting in line, then that could lead to a rebound in AMC stock.
Netflix is a great service, but it is not a substitute for the theater experience. Theaters offer an experience that's much more than just the movie itself: there's popcorn, drinks and socialization with friends or family. This last part can't be replicated at home because everyone else is sitting in front of their TV screen watching Netflix at home—not together as they would be at the movies.
That would certainly have an impact on the short term outlook for AMC stock, but it is unclear what impact it would have on the long term outlook.
In the short term, I think it's clear that there are some positives. The Netflix and Disney+ services won't be as good at first. They will also have a lot of other content which may make them less appealing than they would otherwise be. This could mean that people who would have normally gone to AMC theaters will opt to stay home instead because they feel like they can get their movies in another way. As such, this is an opportunity for AMC to gain market share away from Netflix and Disney+.
If you take a look at things from this perspective then it seems pretty clear why AMC stock may rebound: it has new competition but nothing fundamentally changed about its business model or what it does well (i.e., being better than Netflix or Disney+). What we don't know yet is how much longer this trend will last, how big of an impact Netflix/Disney+ will actually have on the industry by 2020-2022 or even beyond then; however, if I had to guess based on what we know now then it looks like there will still be plenty of room left for movie theaters even after these streaming platforms launch their services later this year as well as in 2020-2021."
No matter what happens with Netflix or Disney+, though, I think there will still be a place for theaters in the future and that means that at some point there will be a rebound in AMC stock.
I think there's a good chance that the stock will rebound. I'm guessing it'll happen sometime between 2022 and 2026. It could happen earlier, but it seems like a safe bet to say that it won't take place any later than that date.
I believe this for two reasons: firstly, Netflix will not completely replace theaters in the foreseeable future (even if they wanted to). Secondly, AMC has been investing heavily in upgrading their facilities and providing more amenities for customers. This means they're going to be more able to compete with Netflix (and likely Disney+).
The Netflix effect could help amc rebound
The Netflix effect could help amc rebound.
As the world of streaming video continues to grow, it's hard to ignore the impact that Netflix has had on its competitors over the past few years. The company has gone from being a small upstart to now being a mainstay in the entertainment industry—and no one is more aware of this than AMC Entertainment Holdings Inc (NYSE:AMC).
Since its founding in 1906 as Allied Artists Pictures Corp., AMC has grown into one of America's biggest movie theater chains with locations all over North America and Europe. But as more people turn away from traditional cable packages and head online for their entertainment needs, AMC is having trouble keeping pace with Netflix's rapid growth.
Conclusion
Ultimately, I believe that the Netflix effect could help amc rebound. There will always be a place for theaters and movies, so long as people want to watch them. If there is a resurgence of interest in cinema among consumers then this would certainly support my thesis that there is room for AMC stock prices to rise again over time.
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