How To Trade AMC Entertainment Stock Before And After Q3 Earnings

AMC Entertainment Holdings, Inc AMC was popping up over 2% Tuesday ahead of its third-quarter earnings print after the market close.

Ahead of the event, AMC on Monday announced a partnership with Zoom Video Communications, Inc ZM to turn some AMC locations in the United States into Zoom Rooms. The news caused AMC to climb slightly higher in the after-market session.

When AMC printed mixed second-quarter results on Aug. 4, the stock gapped down to start the following trading day before surging 30% off the open.

For the second quarter, AMC reported a loss of 20 cents per share on revenues of $1.17 billion. The company slightly missed the EPS estimate for a loss of 19 cents per share but beat the $1.16-billion revenue estimate.

For the third quarter, analysts, on average, estimate AMC will report a loss of 24 cents per share on revenues of $961.09 million.

On Monday, Citigroup analyst Jason Bazinet maintained a Sell rating on AMC and lowered the price target from $3.13 to $1.20. Wedbush reiterated a slightly higher price target of $2 on Thursday.

From a technical analysis perspective, AMC’s stock looks bearish heading into the event, trading in a downtrend and settling into a possible bear flag formation.

It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The AMC Chart: AMC negated its most recent uptrend on Nov. 1, by printing a lower low under the Oct. 28 higher low of $6.36. The stock hasn’t yet confirmed a new downtrend by printing a lower high.

• AMC could be settling into a bear flag pattern on the daily chart, with the pole formed between Oct. 31 and Monday and the flag beginning to form on Tuesday. If the pattern is recognized, the measured move is about 28%, which suggests AMC could fall toward $4.
• If AMC breaks down from the bear flag pattern following its earnings print, Tuesday’s high-of-day will become the lower high of a new downtrend pattern. If the stock rises higher following the event, AMC will regain support at the eight-day EMA, which will negate the flag formation.
• AMC has resistance above at $6.33 and $7.47 and support below at $5.23 and $4.31.

Photo via Shutterstock.