Checking in with a Former Meme Stock Before Earnings

Movie theater name AMC Entertainment Holdings Inc (NYSE:AMC) is gearing up for its second-quarter earnings report, due out after the close on Monday, August 11. Wall Street expects a loss of four cents per share on revenue of $1.35 billion, both of which represent a hefty increase from the same quarter last year. 

AMC Entertainment stock has a fairly dismal post-earnings history. Of the last eight earnings reports, the shares finished only one of their next-day sessions higher -- a measly 0.2% pop in August 2024. The options pits are pricing in a 9.2% move, regardless of direction, this time around, much larger than the 4.9% swing the stock has averaged over the last two years. 

AMC is trading flat at $2.78 after finishing 10 of the last 11 sessions lower. Though the stock bounced off $2.79 after last month's pullback -- putting it at a noticeable region of support -- there is still overhead pressure at the 320-day moving average. So while the stock has short-term rebound potential, the $4 level could keep those gains in check, keeping it within that consolidating channel. 

The former meme stock's 14-day relative strength index (RSI) of 13.4 sits firmly in "oversold" territory, indicating a short-term bounce could be imminent. Year-to-date, the equity is down 30%. 

Options traders are all in on calls, despite the struggles. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 57,132 calls in the past two weeks, compared to 7,224 puts. Considering short interest accounts for 15% of the stock's total available float, some of these calls could be shorts seeking an options hedge.