First, let me cover my ass here. Yes, I do have money invested in AMC. I own 401 shares of AMC, if I could afford more, I would buy more, but I am not a professional investor nor a brokerage firm. I have very little experience in the market. I am a researcher, a compiler of information. Then I try to compress it into something fairly compact to explain a complex situation. If I make money along the way, so be it. If not, then I learn a lot and try again. This is all totally an opinion based on research.
With all of the hype of making fast money, beating down the hedge funds, making “the man” pay for the poor of this country, and so on, the real truths of these two companies are vastly different, one was already headed for failure, one just hit a bump in the road. I do hate to be the bearer of bad news, but GameStop will go bankrupt. Their business model did not progress with the digital age, and it is too late to catch up now. If you want to blame anyone for the demise of GameStop besides themselves, then you blame Sony and Microsoft for moving all of their games to digital downloads. Or you could include the government which just stood by and let Sony and Microsoft monopolize the console market. There are many at fault here. The money is not in the hardware. It really never has been. Any new console hardware has always been just something you need to buy more games. A console is a one-time low-cost purchase. The games are an exponentially higher churn rate, even if the profits per game are a little lower.
In the lifetime of a console, you pay $500 for the console once, but you will spend thousands buying the games to play on the console. Then a new console comes out and the cycle repeats. These games are all downloadable directly from the console vendors’ online stores now. Hence, there is not 1 cent of profit potential for GameStop here.
You can buy new and used console hardware at GameStop, but you can buy that anywhere on the Internet. GameStop’s chance of surviving online was crushed by the gap in time between GameStop realizing their business model was not working and when Amazon took over online retail. GameStop does have an online presence, and I would love to say they will outlive Amazon, but they will not.
I would love to be nostalgically sentimental about GameStop. I spent my fair share of time there. Still, from an investment standpoint, GameStop is dead. They will be bankrupt in one year regardless of how much hard-earned money millions of people threw at them.
AMC, on the other hand, is a different story. And again, I will say right now, I do own stock in this company. This is in no way telling you to buy this stock. This post explains what I see about AMC after researching them before buying the stock and continued research after buying the stock.
AMC was a very profitable company up until the introduction of theatre sized televisions right around 2017. And of course, the introduction of so many streaming services and home theatres holding 10+ people, so there was no need to go out to the theatre. Unfortunately, the current covid-19 pandemic that stopped everyone from going to the movies dealt a huge blow to AMC since their whole profit is people going to the movies, mainly buying concessions.
But here is where my opinion kicks in. People are itching to get out. They want to go somewhere. They want to do anything except sit in the house where most of us have been for a year or more at this point. With the vaccines now going out around the country, people will start to venture out. And one thing they will do is go to the movies, they may have an 80″ TV, but they have been watching that same TV for a year. Just think about it for a minute, I never went to the movies much before the pandemic. But I have been in the house for so long I would go to the movies in a minute at this point.
Streaming into the home over the Internet will be a problem soon with the new data caps that are being introduced by all ISP’s over the next 5 years or so. So along with paying to buy the movie, you will have to watch your bandwidth meter to make sure you don’t start paying those overage fees.
Go to the movies instead.
AMC has the infrastructure and years of entertainment knowledge that will allow them to survive this storm.
Truthfully this is not just about AMC, any theatre chains could profit from people just wanting to get out as the vaccine makes way across the country. Stimulus funds can help fund these local, low cost outings. Not to mention the push to raise the minimum wage to $15 which will give some a bit of extra funds to do things with.
Let me also pose a question to the big wigs at the movie studios. When someone pays to stream a movie into their home how do you know 20 other people are not watching it with them?
End of my Opinion
I am not an investor or a broker.
Just a guy with a lot of time.