AMC Entertainment (NYSE: AMC) is the world's largest movie theater chain. Just as with the now famous case of GameStop, AMC’s share price shot up at the beginning of 2021 after it became a meme stock and a darling of the WallStreetBets subreddit.
Looking to buy into the AMC story from Australia? Here’s how to do it.
Get our complete guide to buying US shares.
About the company
AMC Entertainment Holdings, Inc. operates as a holding company. Through its subsidiaries, it provides a variety of entertainment-related services including theatrical exhibition, movie screening, online ticket booking, food distribution, and other related services in movie theaters worldwide.
It became the nation's largest theater chain through a series of acquisitions. Recent acquisitions include Carmike Cinemas and Regal, UCI & Odeon Cinemas, and European chain Nordic Cinema Group.
In May 2012 AMC Entertainment Holdings became a wholly owned subsidiary of the Beijing-based conglomerate, Dalian Wanda Group. However, according to its most recent annual report released in March 2021, Dalian Wanda had given up the majority stake in AMC. Although Wanda's influence will still remain with two AMC board seats, going forward, "AMC will be governed just as is most publicly traded companies with a wide array of shareholders”, according to CEO Adam Aron.
AMC Entertainment has made some bold moves to lay the groundwork for a revival of its own, beginning with raising US$2 billion from stock sales. The company is looking at acquiring ArcLight and Pacific theaters that are not planned to reopen. It also has plans to pay down US$5 billion of debt to reduce interest costs and to pay off millions in unpaid rent.
The success of AMC in the post-pandemic era will depend on whether people across the world will continue to flock to experience movies on the big screen instead of watching them at home via one of the many streaming services.
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Step 1: Choose a broker
Choose an online broker where you can trade shares listed on the US markets. There are a variety of options you can use from in Australia.
These are some of the features to take into consideration when selecting a broker.
Trading without commissions
It's possible to trade commission-free on a number of trading platforms in Australia, saving a considerable amount of money over time.
Brokers offering fractional shares let you purchase a fraction instead of having to buy the whole share at the very least, meaning you can more easily diversify your holdings.
Intuitive trading interface
It shouldn't be difficult to trade shares. Be sure to choose a broker with a user-friendly interface that you use without a steep learning curve.
Company analysis tools
A trading platform with a robust research and analysis section helps you make decisions based on price history, quarterly earnings reports, market updates, etc. Some brokers also make analyst recommendations available.
Free educational guides and the option to create a demo account where you can practice are particularly useful if you're new to trading.
A lot of platforms provide educational tools for share trading. The best tools are extremely comprehensive and can help you enhance your trading abilities.
Step 2: Fund your trading account
To start buying shares, you will need to fund your account. Keep in mind that your funds may take some time to clear, meaning you it's unlikely that you can start trading immediately.
Step 3: Set a budget to invest
Allocate an amount of money to buy shares that you are prepared to lose (because shares are volatile).
Investing with fractional shares, which give you more flexibility, might be worth considering since you won't have to spend more than your budget permits.
Step 4: Decide whether to buy shares or invest via an ETF
Buying ETF (Exchange Traded Fund) units is a more diversified way to invest than buying a share in a single company, but it is also less appealing to active traders who like to retain control over what they want to hold in their portfolio.
You can get exposure to AMC with various ETFs, including the Vanguard Russell 2000 Value ETF (VTWV) and iShares Russell 2000 ETF (IWM) among others.
Step 5: Set up your order
There are different order types available, which you can use to customise when and how much you want to buy each share for. These order types are widely available.
Market orders are orders that can be purchased or sold at the current market price. However, the price that you actually get may not match the one you were offered by the time that the trade is executed.
Unlike a market order, a limit order is executed at the defined price or less.
This type of order allows you to sell your shares at a certain price or higher. For example, you want to sell AMC shares at US$50 per share. Your stop limit order is executed only when the shares reach this price.
Allows you to define what price to sell. Often used to defend a trade position against market volatility. For example, you could set up a stop loss at US$44 per share. If the price drops to that level, your stop loss order will be executed automatically.
Step 6: Place your order
Having chosen a broker and decided how you want to invest, you can place your order.
Once you buy any shares, you have to monitor your investment. Here are a few things you can do to keep on top.
Watch AMC share price trends and company performance
Share investment can be done with either a speculative motive or to buy and hold with an expectation of long-term value including dividends. Becoming a meme stock has effectively divorced AMC’s trading price from its business fundamentals. As a result, AMC stock can be volatile. But as it gradually loses its meme status, and short-selling subsides, there will come a time when you can count on AMC purely based on its business fundamentals.
Watch for moves by AMC’s competitors
This can be challenging because AMC has two types of competitors.
AMC is currently in direct competition with other movie theatres. The post-pandemic world, however, offers many alternatives to moviegoers. During the pandemic, many of them turned to online streaming for entertainment amid widespread lockdowns. So what are the chances that some of those streaming services, such as Netflix (NADAQ: NFLX), Amazon Prime Video, Disney+, Apple TV, Hulu, HBO Max, and others continue to command a share of movie watchers' entertainment budgets?
As it is, almost half of Millennials and Gen Xers, do not view video content on TV the traditional way and are attracted to content on newer streaming platforms and YouTube.
Disney (NYSE: DIS), for example, is increasingly looking at using movie hits to drive Disney+ subscriptions. And as more movies are released direct to digital, movie theatres risk becoming a niche entertainment industry. Only time will tell.
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