Profit Pregame

What You Should Do Instead of Buying Into this Entertainment Stock’s 23% Rally

Call it the “Comeback Kid”

This stock Is bouncing back after a rough few months…

What’s happening?

After nearly six months of closed doors, AMC theaters is aiming to open 70% of their locations across the U.S. by Friday – meaning 420 theaters will be open for business. The company also expects to open an additional 140 theaters for the three-day weekend – including several in California.

The company will reopen California theaters for the first time on Friday, starting with seven theaters in and around San Diego. Additional reopening’s are set to be announced in the coming weeks, AMC said.

Where’s the money?

The movie theatre industry, much like the travel and hotel industry, has suffered at the hands of Corona. And AMC shares have fallen almost 16% since the start of the year. But as rumors of reopening swirled around, building investor confidence that the company would withstand coronavirus’s financial impact, shares have slowly been climbing upwards.

And after the recent announcement, AMC shares rallied as much as 23% on Wednesday. This rally came as a sigh of relief to the company and investors, seeing that in June, AMC acknowledged that the outbreak had pushed it toward bankruptcy.

But don’t be fooled by this sharp uptick in the stock. While it’s positive news for the entertainment sector, I don’t believe this is a sustainable trajectory. And if you get caught up in the mix with these “headline traders” – it could hurt your wallet in the long run.

Here’s what you need to do instead…

How can I get some?

You know, yesterday I was actually at the movie theaters. It’s one of my favorite past times, and I try to go weekly to get a little “me” time. But just because I enjoy it doesn’t mean I should invest in it.

Now, I understand that right now, theaters, and specifically AMC, looks like an attractive and robust bid – but it’s important to remember that despite the good news, the stock is still down 45% from a year ago. And while the stock has grown from $2 to $8 over the last week – the more important thing to focus on is that the stock has fallen from $12 to $8 over the previous nine months…

And if I’m being honest, as much as I enjoy my weekly outings, I think the movie theater is still a dying business model as streaming is the future.

That’s why I’ll be skipping out on the movie theatre investment frenzy and focus on what I think will win in the long run – Netflix (NFLX.) This stock has been on fire all year and shows no signs of slowing down, so look to buy NFLX on any dip. And rest assured you’ll come out on top in the long run.

In the spotlight: A struggling industry

American Airlines says it will lay off or involuntarily furlough 19,000 employees as of October 1 unless the airline industry gets more help from Congress.

American is the world’s largest airline, boasting 133,700 employees heading into 2020. But the company revealed that it would need to reduce headcount by “at least” 40,000 employees. It said that 12,500 have agreed to leave the company with early retirement or buyout packages, and another 11,000 have agreed to voluntary furloughs for October. In a letter sent out to 17,500 employees – American CEO Doug Parker and President Robert Isom explained further…

“Even with those sacrifices, approximately 19,000 of our team members will be involuntarily furloughed or separated from the company on October 1, unless there is an extension of the federal help.”

Currently, American Airlines plans to fly less than 50% of their airline in the fourth quarter, with international particularly, reduced to only 25% of 2019. The outlook continues to look grimmer with every passing day. And currently, all eyes are on the government to see if they will extend a helping hand to the industry.

No one can truly predict what will come next for airlines. But I’ll be keeping a close eye on the industry and be sure to keep you updated along the way.

Good News!

Even though I don’t think AMC’s anticipated bump is a sign of things to come in the long run for that particular industry, there are still plenty of causes for optimism lately…

Between the rising Dow and S&P 500, businesses beginning to reopen, and progress being made every day in the race for a Covid-19 vaccine, there will be lots of money to be made in the coming months.

My Project 303 readers and I have been licking our chops at the thought of the next recommendation from my S.C.A.N. trading system…

And I want you to be on board when S.C.A.N. finally releases it!

Click here now to claim your membership.

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