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Why AMC Entertainment Stock Has Fallen 14% This Year

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Broader market sell-off

AMC Entertainment (AMC) stock has fallen 14.0% this year. It started this month with a gain, touching $15.27 on December 12, but then fell again last week. The broader market sell-off caused by the Fed’s interest rate hike may have erased its gains. The S&P 500 has fallen 7.7% this year, while the Dow Jones has fallen 7.5%.

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A good year so far

AMC’s revenue growth has been rather good this year. In the three quarters of fiscal 2018, its revenue has twice beaten estimates twice and aligned with analysts’ estimate once, and it rose year-over-year in all quarters. This year, AMC has been boosted by its strong box office performance, strategic measures, and acquisitions of Odeon Cinemas, Carmike Cinemas, and Nordic Cinema Group. The addition of recliners and large-format screens, which carry a ticket premium, has contributed to the company’s top-line growth.

One thing that has stood out this year for AMC Entertainment has been Stubs A-List. In its third-quarter 2018 conference call, AMC reported that Stubs A-List was nearing 500,000 paid members just five months after its launch in June, bringing AMC’s loyalty membership to over 17.0 million households. 

Stubs A-List was AMC’s attempt to contain any threat from MoviePass, which has been disruptive in the theater business. For $9.99 per month, the service allowed cardholders to watch a movie per day. However, the unsustainable nature of the subscription model has put MoviePass in massive trouble, and the service has seen significant losses. MoviePass has been trying to change its subscription plan and business model to bail itself out.

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