AMC Stock Is Soaring for No Good Reason, and That Can’t Last Long

At this point, I must be sounding like a broken record. At the time of writing this piece, AMC (NYSE:AMC) stock has consistently added more than $1 billion in each of the last three sessions…

Individual investors eager to save the movie theater industry are rallying behind the embattled movie theatre chain.

On May 27, shares jumped by 36% to close at $26.52 a pop as 691 million shares changed hands on AMC’s busiest day since January. While it did give a little back, it will open today right around $26.

For all the naysayers out there, including me, who have said that AMC has a flawed business model, it is time to eat humble pie.

Retail traders showed their muscle once again, pushing the company’s market value to a record $13 billion.

It is time to rejoice if you threw caution to the wind and hopped onto AMC stock for just this kind of rally. At this point, you probably have had enough of analysts saying it is the wrong move or that you are better off investing in safer, more reliable equities.

But again, the rally does not convince me that AMC stock is a good long-term investment. Parking your capital in this company is definitely akin to gambling with your money.

So, it is important to remember the golden rule of gambling. Only gamble money you can afford to lose.

You could say much the same thing for a company like NIO (NYSE:NIO), for example. The EV maker is sometimes labeled as China’s Tesla killer and is extremely overvalued, but at least there is a sound business model, strong tailwinds, and an idea that investors can understand and rally behind underlying Nio.

The same, sadly, cannot be said for AMC, which is operating an archaic business model.

Reddit Saves AMC Stock From the Pink Sheets

Stock markets operate very much like democracies. While U.S. stock markets are more democratic than most, with more than half of American households owning shares or investment funds, the general gist of the stock market is based around fair play.

When a company debuts on a bourse, you have to decide whether you want to commit capital based on its history, management, or outlook.

If you feel that everything looks good, you park your capital and see it grow, hopefully getting some…

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