New York CNN Business  — 

Movie theater chain AMC is a top pick for meme investors, but the stock hasn’t exactly turned out to be the feel good hit of this summer.

Shares of AMC (AMC) were trading around $18 just before the company decided to issue a new class of preferred shares to existing investors in late August. The hope was that the so-called apes who are fans of AMC (AMC) on Reddit’s WallStreetBets subreddit and other social media sites would eat up both stocks like a carton of buttery popcorn.

AMC even made the ticker of the new shares “APE” in honor of its Reddit devotees.

But since AMC split into two stocks, the combined value of AMC and APE is hovering near $14. (AMC is trading for around $8.60 and APE is at about $5.20) Do the math and that’s a nearly 25% drop in just the past few weeks. The price of one AMC plus one APE share is also about 50% below where AMC’s stock began 2022.

What’s the problem? It seems no amount of promotional hype from AMC CEO Adam Aron can overcome the fact that the economics for theaters are terrible – no matter how often he notes how much cooler AMC is than other theaters and how it has this army of loyal individual investors.

AMC rival Cineworld, which owns US-based chain Regal, just filed for bankruptcy. Shares of other movie theater owners, such as Cinemark (CNK), IMAX (IMAX) and Marcus (MCS), are all lower this year by about 10% to 15%. That’s roughly in line with the S&P 500’s 16% drop.

Sure, it’s true that AMC is in better financial shape for now than competitors. AMC reported at the end of the second quarter that it had $1.17 billion in cash and other liquidity on its balance sheet, a fact that Aron proudly noted in a tweet Wednesday following the news of the Cineworld bankruptcy.

“Cineworld/Regal just filed for Chapter 11 bankruptcy protection for its theatres in the U.S.and U.K. Fortunately, AMC is in a very, very different situation — because retail investors embraced us and let us raise boatloads of cash. Thank you to retail! You really did save AMC,” Aron wrote.

Movie fans also seem willing to go to theaters for truly big blockbuster film events like the long-awaited “Top Gun” sequel, the latest in the Jurassic World and Marvel franchises or animated fare for the kids. The box office in the US has rebounded from the depths of 2020 and 2021.

But theaters now face stiff competition from streaming video. Hollywood is shifting more movies to platforms like Disney+, Netflix (NFLX), Paramount+, Comcast (CMCSA) owned Peacock and HBO Max, which like CNN is part of Warner Bros. Discovery.

The studios also offer a deluge of original, binge-worthy TV shows on these and other services such as Amazon’s (AMZN) Prime Video, Apple TV+ (AAPL) and Hulu, which is also controlled by Disney (DIS).

Add all that up and it’s not hard to see why AMC remains in a somewhat precarious financial position. The company is expected to report a loss of about $638 million this year. That is down from a loss of nearly $1.3 billion in 2021 though. And sales are expected to surge nearly 70% to $4.3 billion.

AMC, to its credit, is taking bold steps to try and boost sales (and its stock price) further though. The company is now selling its signature popcorn outside of theaters through partnerships with retailers. AMC also made the bold move to invest in a gold and silver mining company earlier this year.

At the time, Aron said the decision to buy a stake in Hycroft Mining was an example of how AMC is “thinking creatively and boldly about our future,” adding that Hycroft is “just like AMC of a year ago…It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue.”

But others in the industry seem envious of the fact that AMC has become a pop culture phenomenon.

“While Cineworld would, of course, have welcomed the liquidity of becoming a “meme stock” like AMC, we were never so lucky!” said Israel Greidinger, deputy chief executive officer of Cineworld, in the company’s bankruptcy filing,

That may be just sour grapes…or stale popcorn…though.

Nobody can accuse Aron and AMC of throwing up their hands and doing nothing to combat the fact that the economics of the movie theater business have arguably changed forever. Aron embraced the apes with open arms. Whether or not that means the stock will rebound is another question entirely.