Is Imax stock a buy amid the AMC meme stock fiasco?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jun 8, 2021
  • Meme stock AMC gained 22% before pulling back late on to close 14.80% up on Monday.
  • AMC shares demonstrated the same level of volatility over the last few weeks.
  • The stock’s fiasco positively impacts Imax, according to the movie theatre company’s CEO.

Last week, Imax Corp (NYSE:IMAX) CEO Richard Gelfond told CNBC’s ‘Squawk On The Street’ AMC Entertainment Holdings Inc.’s (NYSE:AMC) trading fiasco has positively impacted his company. Gelfond spoke after the meme stock swang to a net session loss of 21% on Thursday after plunging more than 34% in the morning hours. AMC extended the same Volatility pattern to this week after swinging up 22% on Monday before pulling back late on to end the session 14.80% above Friday’s close.

Could AMC buy Imax?

The recent surge in the price of AMC now values the company at about $27.54 (£19.48) billion. The massive rise in AMC stock price has triggered speculation that the company could be poised to buy rival Imax. However, Gelfond recently refuted those suggestions saying that, Imax is not for sale and that the company was in an excellent financial position. Therefore, it looks less likely that AMC would buy Imax any time soon. But a lot can change very quickly in the stock market.

Source – TradingView

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AMC shares appear to be trading within a consolidative triangle formation in the 60-min chart. The stock has recently pulled back to return to the mid-section of the 14-hour RSI.

Investors can target short-term profits at around $63.20 or higher at $72.62. The key support levels are $47.31 and $37.14.

Is Imax benefitting from AMC stock’s fiasco?

IMAX shares appear to be enjoying a solid bull run amid AMC’s trading frenzy. Imax stock is up more than 23% since the 9th of February. So, from this perspective, there is a positive correlation between the increase in the buying activity in AMC shares and Imax stock price.

From an industry perspective, if the price of a company with a massive market capitalization moves up significantly, then the industry tends to respond accordingly. Some investors then go hunting for similar stocks. Furthermore, with more people returning to theatres after lifting movement restrictions, movie theatres are bouncing back.

Source – TradingView

Technically, Imax appears to be trading within an ascending channel formation in the daily chart. The stock also seems to be enjoying strong support from the 100-day moving average. Investors can target profits at around $23.57 or higher at $25.04. The key support levels are $20.36 and $18.90.

Bottom line: It may be time to buy IMAX stock’s bullish momentum

In summary, Imax shares appear to enjoy a solid bullish momentum amid AMC’s trading fiasco. IMAX looks like a good buy in the short term for now. But you cannot count on AMC’s trading frenzy to play a crucial role in the stock price for long.

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