AMC Stock is gaining momentum on social media thanks to the news of the “most influential” company
It’s not only Twitter (NYSE:TWTR) and Reddit users who notice AMC Entertainment (NYSE:CMA) at present. Today, the cinema chain is also attracting the attention of TIMEwho named him to a 2022 list 100 most influential companies. The magazine cites AMC’s “meme stock mastery”. Currently, AMC stock is down, but this new ranking has generated considerable momentum through social networks.
The buzz around AMC this morning is strong. However, that did not push the stock higher. Despite an initial rise as markets opened, AMC stock reversed direction within the first hour. As of this writing, it is down more than 6% for the day and shows no signs of rebounding.
That said, through it all, many retail investors are still doubling down on the stock and calling for bullish plays. the TIME The ranking may not be enough to bring the stocks back into the green, but it has certainly generated a lot of excitement.
What’s going on with AMC Stock?
Last night, AMC CEO Adam Aron tweeted that the company had been nominated for Times exclusive list. “You can all be proud,” the executive told his followers. Obviously, many retail investors are.
You can all be proud that Time Magazine today named AMC Entertainment one of the “100 Most Influential Companies of 2022” in the world. We join Alphabet (Google), Amazon, Apple, Disney, Meta (Faceboook), Microsoft, Moderna, Pfizer, Reddit and Walmart among other big companies. pic.twitter.com/lWXvaGofJ6
— Adam Aron (@CEOAdam) March 31, 2022
In addition to ranking, TIME noted AMC’s rise to prominence amid economic uncertainty spurred by Covid-19. The article says the following:
“Internet-savvy investors last year, the company became an “equity meme”, making it popular despite shaky fundamentals. By gobbling up stock, these traders drove up AMC’s price, urging traditional investors to bet against the company.
That description pretty much sums up AMC’s journey from struggling movie theater chain to market sensation. However, it also touches on another important aspect; the stock’s growing popularity has been driven by the same contrarian investing mentality that propelled GameStop (NYSE:EMG) to historic highs. AMC shares became popular because investors took interest in them, not because of company-specific catalysts.
In this logic, AMC is certainly an influential company. It helped change the face of investing, carving out a niche for itself as one of the biggest meme stocks out there. Investors should be cautious, however. That doesn’t necessarily mean it’s a good buy.
Recently, AMC acquired a 22% stake in Hycroft mining holding company (NASDAQ:HYMC). While the mining company has done well since that purchase, AMC has not. As InvestorPlace Contributor Alex Sirois said of AMC, “It wasn’t a worthwhile investment before, and it’s not a worthwhile investment now.”
What this means
There is an important lesson for investors when it comes to AMC shares. A company can have an influence on changing market trends, but that does not mean that it is a profitable investment. Since the first rise in meme stocks, AMC has worked hard to demonstrate sustainable growth. Its decline of more than 37% over the past six months reveals that nothing has worked.
While many small investors remain committed to AMC shares, insiders have bailed out. The company has tried to take advantage of the recent mining boom, but its biggest catalyst over the past six months has been the release of Spiderman: No Coming Home.
Today, there seems to be no coming home for AMC Entertainment. The superheroes couldn’t save him. A TIME neither does magazine rankings.
At the date of publication, Samuel O’Brient held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publication guidelines.