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AMC Stock: How Will Apes React To These Events?

AMC stock did not respond well to earnings that were far from disastrous. With popularity decreasing and the CEO shedding shares as planned, investors are at a crossroads.

AMC has recently reported Q3 results that, in my view, were at least decent. Yet, AMC stock  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report did not resist the bearish wave that followed and has dipped 15% in only two trading days.

Figure 1: AMC theater facade in New York, NY.

Figure 1: AMC theater facade in New York, NY.

At this point, AMC investors, many of whom identify themselves simply as “apes”, have already become accustomed to seeing the movie theater operator’s share price bounce around and test resistance. How will they react to the most recent move lower in AMC?

(Read more from Wall Street Memes: AMC Stock: Now We Know What Tickles Investors)

The Adam Aron factor

The market reacted negatively to CEO Adam Aron’s earnings call discussion about the sale of some of his personal AMC shares in the fourth quarter. Interestingly, none of it should have caught investors by surprise, as the transactions had already been disclosed at least three months ago. Yet, on Q3 earnings day, AMC dipped 2% in after-hours trading as soon as the CEO began talking about the subject.

According to Seeking Alpha, Mr. Aron has filed to sell 1.25 million shares of AMC on November 9, which will effectively leave him with a bit over 400,000 shares left plus millions more issuable in the future. Then, half of the intended sale was promptly executed at a price of $40.53 per share.

Of course, it is hard to tell whether the CEO’s transaction had any direct impact of AMC stock price in the past two days. Considering that nearly 63 million shares trade hands every day, I doubt that Mr Aron’s transactions, representing around 1% of the average daily volume, can be blamed for the share price decline.

But again, deflated sentiment might be at play here – even though a 67-year-old investor shedding some of his AMC position seems very reasonable to me.

AMC: losing steam online

The other interesting development of late has been the sharp decline in AMC stock’s popularity across the discussion boards. Even on earnings day, AMC failed to feature among the top 10 most discussed tickers on WallStreetBets – and then the number of mentions dropped sharply the next day. According to Ape Wisdom, AMC is now only the 12th most talked about stock on Reddit.

Figure 2: Trending stock on Reddit on November 10.

Figure 2: Trending stock on Reddit on November 10.

This could be a concerning trend for apes, HODLers and momentum traders. The SEC, for example, has found that the surge in GameStop stock (GME) in January was caused primarily by overwhelming popularity leading to a buying spree. AMC can likely only “go to the moon” if something similar happens to it.

It will be interesting to see what happens next: will AMC holders feel discouraged by the recent events (CEO transactions, stock dipping below $40 again, etc.)? Or will they rally behind their cause once again and cause a bullish spark? We will soon find out.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)