I want you to decide if you think taking stock tips from Reddit is a good idea, especially for long-term investment and growth. To do that, I want you to analyze AMC and tell me if you think AMC is a good investment.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Right when the pandemic started in March 2020, the stock market crashed. Around the end of March, a friend messaged me, and he was very excited that the stock price of AMC Theaters had dropped to $2.60 per share, so he told me he bought 200 shares. He said, “They were at $16.43 a year ago! If they go back up, I’m going to make so much money!” Since then, AMC has been on a wild ride of stock price fluctuations because large numbers of newer investors are taking stock tips from social media sites such as Reddit, thereby driving up and down the prices of stocks such as AMC and GameStop.

I want you to decide if you think taking stock tips from Reddit is a good idea, especially for long-term investment and growth. To do that, I want you to analyze AMC and tell me if you think AMC is a good investment.

Take a look at AMC financial statements (TTM stands for "Trailing Twelve Months." You can use TTM in your analysis or use regular fiscal years - it's up to you.). You can pull AMC's financial statements from EDGAR, or you can use the following links to Yahoo Finance:

  • AMC's Income Statement is here (Links to an external site.)
  • AMC's Balance Sheet is here (Links to an external site.)
  • AMC's Cash Flow Statement is here (Links to an external site.)

After accessing AMC's financial statements, please answer the following questions:

  1. Give me at least 2-3 ratios from from AMC's latest financial statements.
  2. Based on ratios and the financial statement analysis tools presented in the chapter, do you think AMC is a good investment? Why or why not?
  3. Please respond to at least one other person's post in a thoughtful and meaningful way.

As long as you provide valid, accounting-based support for your position, there are no wrong answers. Click "Reply" below this prompt to begin your answer. 

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