2 Reasons AMC Stock Is Soaring in June

AMC (NYSE: AMC) is the largest movie theater operator in the world, but being the leader in a troubled industry hasn't done much for the company over the past few years. With the advent of streaming and residual fears from the pandemic, moviegoing just isn't what it once was and AMC continues to struggle.

However, Memorial Day weekend was a boon for the company and AMC stock has been climbing. Let's see why and what it means for the future.

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1. It's riding on the success of two smash-hit films

Streaming from home has taken a toll on the box office, but there is still life left in theaters. Four of the top 10 highest-grossing films ever were released since the pandemic started, including Avatar: The Way of Water in the No. 3 spot and last year's Inside Out 2. People are still going to the movies.

That fact was reinforced with a record Memorial Day weekend in May. Disney's live-action remake of Lilo & Stitch had the highest-ever four-day Memorial Day opening, and it was buttressed by a strong showing for Paramount's Mission: Impossible -- The Final Reckoning. Altogether, these two topped a blowout weekend with $326.7 million in domestic ticket sales, and Lilo & Stitch is already the second-highest-grossing domestic film of the year.

Image source: Getty Images.

Of course, that success trickled down to generate incredible financial results for AMC. Management said it set an all-time record for admissions revenue, food and beverage revenue, and total revenue for a weekend Memorial Day opening, and that the five-day stretch was the third-highest revenue for any five-day slot in more than 10 years.

As for attendance, this was the highest-attended weekend and highest-attended five-day period of the year, both domestically and globally.

Management didn't provide specific financial metrics for the weekend, so investors aren't likely to hear the nitty-gritty details until the second-quarter earnings release sometime in July or August. But management's update and optimism are boosting investor confidence.

2. It may have turned a corner

It's nice for the company to have a solid, record-breaking opening, but can it last? Management thinks so, and the market may be pricing that in.

CEO Adam Aron said that after this weekend, AMC has turned a corner. "With many more potentially huge movies coming in June all the way through the end of 2025, and beyond that deeply into 2026 as well," he said, "we firmly expect to be enjoying a robust theatrical box office as we look ahead."

Here's what to be excited about. Disney has a full slate of films coming out over the next few years, including the third film in the Avatar series. The first two are the highest-grossing and third-highest-grossing films ever, and the next film is slated for release this coming December. It also has the next Frozen film and other top franchises coming out soon. Warner Bros. has its own expected hits coming out, including a new Superman, and Comcast's Universal Studios has the next installment of Wicked and a new Shrek. Sequels to popular franchises can be big business.

But the company is still reporting revenue declines and losses as of the 2025 first quarter. It will take some time to see if AMC has indeed turned a corner.

The short sellers are out

As the price has increased in June, so has the short interest in AMC, hitting almost 15% of all outstanding shares. These investors are betting on this being a short-term boost and that the price will fall from this surge. Even though AMC stock is up 29% over the past month, it's still down 15% year-to-date. Unless the company releases incredibly strong earnings for the second quarter and keeps up its performance, the price jump may not last.

Part of what's frustrating about that for investors is that many variables are beyond the company's control. It's up to film producers to create hit movies that bring viewers into theaters and to make the decision to keep them there long enough before they hit streaming services. That can be quite lumpy.

You need to have real confidence in the future of the film industry and the resilience of theaters as a beckoning call for die-hard fans to want to invest in AMC's future, and for most investors, that time isn't now.

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Jennifer Saibil has positions in Walt Disney. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.