Stock Market

The epic rally in AMC Entertainment (NYSE:AMC) stock has a lot of people fatigued. And like all meme stock rallies, the latest one involving movie theatre chain AMC is likely to end in spectacular fashion. In one week, AMC stock rallied 157% higher, dropped 33% and then rose again by 25%.

It’s been quite the rollercoaster. And what has driven the #AMCArmy of retail investors to push the share price sky high has been the fact that the world’s largest movie theatre chain was brought to the edge of bankruptcy by the Covid-19 pandemic. That, and the stock has been one of the most heavily shorted on Wall Street this year.

But AMC’s problems are not unique. The entire movie industry, from production to exhibition, has been devastated by the pandemic and many companies have struggled just like AMC.

Here are seven movie stocks ready for the #AMCArmy finale.

  • Cineplex (OTCMKTS:CPXGF)
  • Walt Disney (NYSE:DIS)
  • Lions Gate Entertainment (NYSE:LGF.A)
  • Netflix (NASDAQ:NFLX)
  • Cinemark Holdings (NYSE:CNK)
  • IMAX (NYSE:IMAX)
  • Marcus Corporation (NYSE:MCS)

Movie Stocks: Cineplex (CPXGF)

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Toronto-based Cineplex, which operates more than 165 movie theatres across Canada, has been in business since Charlie Chaplin was making silent pictures. And, like AMC and other movie theatre chains, Cineplex has had a tough go of it during the pandemic.

CPXGF stock is now trading at $13.48 a share, about half the $25.41 it was at in February 2020 before Covid-19 landed. The share price had been as low as $3.30 a share last October after the company reported its quarterly revenue plunged 95%.

In addition to having its theatres shuttered for nearly a year and reopened with capacity limits, Cineplex has had to cope with a litany of other problems. First, Britain’s Cineworld Group backed out of a deal to acquire Cineplex for $2.18 billion, a deal that would have made the merged companies the biggest operator of movie theaters in North America. Then, the company’s stock was removed from Canada’s benchmark stock index, the S&P/TSX Composite Index, and it was forced to sell its its head office in Toronto for $57 million CAD ($47 million) in order to raise cash to pay down debt.

At last check, Cineplex was negotiating to receive relief from its creditors as it eagerly awaits the start of the summer movie season.

Walt Disney (DIS)

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DIS stock has had a great run over the past year, propped up by the meteoric rise of the company’s Disney+ streaming service. The Walt Disney streaming service that is home to popular film and television franchises such as Star Wars, Marvel superheroes and Pixar animation grew to 103.6 million subscribers within 18 months of launching and kept the Mouse House afloat during the pandemic while its theme parks and cruise lines were closed.

However, the shine has come off DIS stock recently over concerns that growth in the company’s streaming service will now begin to slow.

However, as a diversified company, Walt Disney should perform well as its theme parks around the world reopen this summer, its cruises set sail again, and it begins developing new content for the Disney+ platform. And, the company hopes to keep its growth in streaming robust by bundling Disney+ with other content offerings that include the sports-related ESPN Plus platform and movies and TV shows offered through Hulu, both of which Disney owns. With so much diversification, it likely won’t be long before DIS stock recovers and tests new highs.

DIS stock is currently at $176.81, down 13% from its 52-week high of $203.02 a share reached in March.

Lions Gate Entertainment (LGF.A)

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Lions Gate Entertainment is a producer of popular films and TV programs, including the Hunger Games, John Wick and Saw movie franchises and the Emmy Award-winning TV series Mad Men. The company that started life in Vancouver, British Columbia in 1997, Lions Gate is today headquartered in Santa Monica, California. Coming out of the pandemic, CEO Jon Feltheimer is looking to be acquired by a larger studio.

Investment bank Loop Capital has put a price target on Lions Gate of $8 billion and said any acquirer would get a rich catalogue of content that also includes the John Wick and Expendables movie series, as well as TV shows such as Nurse Jackie, Nashville and Weeds. However, this isn’t the first time that Lions Gate has put out a ‘for sale’ sign. The company held talks in 2018 with Amazon (NASDAQ:AMZN) and Comcast (NASDAQ:CMCSA) about a possible acquisition, though nothing ultimately came from the discussions.

LGF.A stock has had a strong run, up 82% year-to-date to $20.21 a share.

Netflix (NFLX)

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NFLX stock has been under pressure lately as fears grow that the boost the company received during the pandemic is over. Netflix’s most recent earnings results did nothing to ease the fears of Wall Street. The Silicon Valley-based streaming giant reported on April 20 that it added 3.98 million subscribers in the first quarter, missing Wall Street’s estimate of 6.29 million subscribers and its own forecast of 6 million.

The current quarter looks even worse with Netflix forecasting only a million new customers worldwide, less than a quarter of the 4.44 million forecast by analysts.

To be fair, Netflix is largely a victim of its own success. After adding more than 20 million new subscribers last year (2020), growth was bound to level off at some point. Today, Netflix has nearly 208 million subscribers worldwide. Netflix’s subscriber growth has also been hurt by a lack of new content as TV and movie productions were halted during the pandemic.

The company hopes to release a glut of new content later this year and is targeting Asia, where subscriptions grew 65% last year, for continued growth.

NFLX stock has fallen 11.6% since its last quarterly results release and now trades at $485.81 a share.

Cinemark Holdings (CNK)

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Another major U.S. movie theatre chain besides AMC is Plano, Texas-based Cinemark Holdings. Founded in 1961, Cinemark operates movie theatres under several brands, including Cinemark, Century Theatres and Tinseltown. The company is also global with operations as far afield as Taiwan and Brazil. At its current price of $23.21 a share, CNK stock is currently at about half the $40 a share it was trading at in the summer before the global pandemic.

Cinemark Holdings revenue got hammered over the past year as its theatres around the world were shut. Revenues for 2020 came in at $700 million, down 80% from $3.3 billion in 2019. Losses for last year came in at record $5.25 per share.

Things are beginning to improve as Covid-19 vaccination rates accelerate and with a slate of blockbuster movies on deck for the coming summer months. However, currently the majority of Cinemark Holdings theatres are operating at 50% capacity as pandemic restrictions remain in place in most jurisdictions.

IMAX (IMAX)

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Canadian theatre company IMAX Corporation, which makes giant movie screens and the films that are shown on them, is another company that will be glad to see both the pandemic and the AMC stock rally end.

Investment bank Goldman Sachs (NYSE:GS) recently downgraded IMAX stock to “sell” from “neutral” and lowered its 12-month price target on the shares to $18.60, which would be a 16% drop from the current share price of $22.04.

Goldman forecasts that the U.S. box office will only recover to about three-quarters of its pre-pandemic levels, noting that movie theater attendance had been in decline before the pandemic. The bank also warned that a glut of new theatrical releases will lead new movies to cannibalize each other this summer.

Despite the negative sentiment, IMAX remains hopeful. Pre-sales of the IMAX version of the upcoming Fast & Furious film (the ninth in that series) recently set a record in China, one of IMAX’s biggest markets globally.

Marcus Corp. (MCS)

Source: Shutterstock

Regional operator Marcus Corp. is the fourth-largest movie theatre operator in America. Its 1,110 screens are primarily located in Wisconsin, Illinois, Iowa, Minnesota and Nebraska. The Milwaukee, Wisconsin-based company also owns 17 hotels and resorts in the Midwest, as well as California and Texas.

The company’s first-quarter revenue came in at $50.8 million, 69% less than last year’s comparable revenue of $159.5 million.

However, Marcus’ cash position remains strong, with the company reporting cash reserves of $213 million at the end of this year’ first quarter. Still, the pandemic has taken a toll on Marcus’ business and share price. MCS stock has traded as low as $6.84 and as high as $24.71 over the past year. The share price now stands at $22.57.

In early May, Marcus reported that nearly 90% of theatres had reopened and that it was expanding its operating days and hours as new movies begin to be released theatrically.

Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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