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AMC Entertainment Holdings stock (NYSE: AMC) has shot up more than 110% in just the last one week (five trading days) and is currently trading at $26 per share. AMC Entertainment Holdings – the biggest movie theater chain – has the largest share of the U.S. theater market, ahead of Regal and Cinemark Holdings. AMC was the most active stock on NYSE last week with the year-to-date gain coming in at a whopping 1120%. AMC has been one of the most active stocks since the beginning of 2021, with most of its rise being driven by retail investors’ agenda to fight the hedge funds who had massively shorted the stock. With the stock price rising due to short squeezing, short sellers are forced to buy back borrowed shares to close their short position and limit losses. Thus, along with buying by retail investors, the forced closing of short positions has further fueled the rally in AMC stock. The recent rise in stock price has almost nothing to do with the company’s fundamentals, which are still severely affected due to the pandemic and boom in streaming. Any meaningful recovery in financials will happen only once the general public returns to theaters in droves. Speculative trading by hedge funds and coming together of investors to try and squeeze the short positions held by these hedge funds has led to sharp rise in the stock price in the last one week and also since the beginning of 2021.

But will AMC stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last eight years, returns for AMC stock average -30% in the next one-month (21 trading days) period after experiencing a 113% rise over the previous one-week (five trading days) period. The stock is likely to underperform the S&P500 over the next one month, with an expected return which would be almost 31% lower compared to the S&P500.

But how would these numbers change if you are interested in holding AMC stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test AMC stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF AMC stock moved by -5% over five trading days, THEN over the next 21 trading days, AMC stock moves an average of 11 percent, which implies a return which is 10% higher than that of the S&P500.

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More importantly, there is 46% probability of a positive return over the next 21 trading days and 47% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of AMC Stock Movements:

Question 1: Is the average return for AMC Entertainment Holdings stock higher after a drop?

Answer:

Consider two situations,

Case 1: AMC Entertainment Holdings stock drops by -5% or more in a week

Case 2: AMC Entertainment Holdings stock rises by 5% or more in a week

Is the average return for AMC Entertainment Holdings stock higher over the subsequent month after Case 1 or Case 2?

AMC stock fares better after Case 1, with an average return of 11.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 3.6% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how AMC Entertainment Holdings stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold AMC Entertainment Holdings stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For AMC stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is generally lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although AMC stock appears to be an exception to this general observation.

AMC’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for AMC Entertainment Holdings stock by changing the inputs in the charts above.

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