1 Reason I Haven't Bought AMC Entertainment Stock and Probably Never Will

There's little the market loves more than rewarding a turnaround story, and boy, does AMC Entertainment (NYSE: AMC) appear to have one in the works.

That's what CEO Adam Aron seems to believe, anyway. As he commented in the movie theater chain's third-quarter results posted early this month, "We expect the fourth quarter industrywide box office will turn out to be the highest-grossing fourth quarter in six years," adding, "We also continue to believe that the size of the 2026 box office will be dramatically larger than that achieved in 2025."

This is a bullish pep talk, however, that I won't be buying into anytime soon, if ever.

Image source: Getty Images.

See, we've been hearing this kind of optimism for a while now, none of it to any avail. The theater business isn't just struggling -- it's been permanently damaged. Indeed, the industry as we know it will be lucky to survive at all. Underscoring this bearish argument is the fact that AMC hasn't actually turned a net profit in a single quarter since before the COVID-19 pandemic, and was barely profitable when it was.

Just not something people do like they used to

Cutting straight to the chase, the solidification of the then-still-wobbly streaming business during and because of the coronavirus contagion wiped away much of consumers' remaining interest in the theater experience.

Oh, certainly some films are still best seen on the big screen, and there's no denying plenty of people are still willing to pay for the in-person entertainment experience. The newest Fantastic Four flick released in July, for instance, has domestically sold nearly $300 million worth of tickets (according to numbers from Box Office Mojo). But, by and large, people just aren't feeling it the way they did prior to the pandemic.

The graphic below tells the tale. Although the business has obviously bounced back from its COVID-prompted slump, it's also obviously leveling off at about 30% below its pre-pandemic peak.

Data source: Box Office Mojo.

What gives? As was noted, the mainstreaming of at-home streaming during and because of the COVID-19 contagion proved consumers are perfectly content to watch feature-length films -- including new releases -- in the comfort of their own homes. The availability of affordable giant-screen televisions around this time only helped, of course. Data compiled by Statista indicates the average TV screen in North American homes is a whopping 55 inches.

And studios are on board with bypassing the silver screen as well, by the way. Vicious, along with Netflix's (NASDAQ: NFLX) suspense thriller A House of Dynamite, are just a couple of recent critically acclaimed films that could have done well in theaters, but were sent straight to streaming platforms instead.

More to the point for interested investors, it's not clear what Aron is seeing on the horizon that will change the industry's trajectory for the better now if it hasn't happened yet.

Possible doesn't mean probable

Sure, anything's possible. Three years removed from pandemic-prompted shutdowns, though, a full rebound of the theater business seems fairly unlikely; if it was going to happen, we'd see at least some clearer evidence of it by now. And given that the recovery thus far has yet to push AMC out of the red and back into the black, it's pretty difficult to have hope here.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.