Should I invest in AMC stock?

Written by: Michael Harris
February 28, 2021
  • AMC Entertainment awarded its chief executive Adam Aron with a $3.75 million bonus
  • Shares of AMC closed the week over 40% higher
  • The area just below $12.00 will continue to act as a major target for buyers going forward

AMC Entertainment (NYSE: AMC) stock survived another wild week after WSB investors returned to trigger a second wave of frantic buying.

Fundamental analysis: CEO Adam Aron Receives a $3.75M bonus

AMC Entertainment awarded its chief executive Adam Aron with a $3.75 million bonus during a period when the theater chain dismissed a number of employees and was forced to close cinemas amid the coronavirus pandemic.

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The Leawood, Kansas-based theater chain took a huge blow from the pandemic and was forced to shut down operations for a large part of last year.

Many believed AMC was heading for bankruptcy, however, the company managed to negotiate its massive debt and said it has now secured enough money to keep operating. AMC has substantially increased its debt over recent years due to massive investments in theaters and acquisitions of rivals including Carmike Cinemas and UCI & Odeon Cinema Group.

AMC has come to an agreement with film company Universal Pictures which allows it to release its titles on-demand within 17 days of their screenings. In exchange, AMC will receive a percentage of Universal’s home entertainment revenues.

After the coronavirus outbreak in March last year, AMC closed around 1,000 of its theatres around the world. During that period, over 26,000 AMC employees were laid off, including Aron, who worked without salary for a certain period. 

Before receiving the $3.75 million bonus last year, Aron was paid $1.25 million in bonuses in November and a total compensation package of $9.67 million in 2019. 

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Technical analysis: Another wild trading week

Shares of AMC closed the week over 40% higher while trading about 80% in the green at one point. A close at $8.01 is of a bullish nature as the 100-DMA will now act as support around $7.20. 

AMC weekly chart (TradingView)

The buyers have tried to tag the 200-DMA that comes just below the $12.00 mark. This line will continue to act as a major target for buyers going forward. Any pullback to $5.0 will be seen as a buying opportunity. 

Summary

Adam Aron, CEO of AMC Entertainment, received a $3.75 million bonus last year when the majority of the company’s theaters were closed amid the coronavirus pandemic. In the meantime, shares of the embattled company soared 40% as WSB investors returned to play a more active role in markets again.