Get Out of Movie Theater Stocks While You Still Can

The prognosis isn't getting any better for the movie theater industry. AMC (NYSE: AMC) -- in a letter obtained by Deadline -- wrote to its landlords late last month, explaining that it will stop paying rent this month. The sobering report finds Loop Capital analyst Alan Gould downgrading the stock to "sell" on Wednesday, concerned about the liquidity of the country's largest multiplex operator.

AMC argues that its theaters have been closed since mid-March. It has furloughed 25,000 employees, reduced salaries of its general managers, and slashed payroll at its corporate office. It can't afford to pay the lease on theaters it can't use. Gould sees bankruptcy a "distinct" possibility for AMC, and even if it can line up financing, it will be highly dilutive. He is lowering his price target on the stock from $4 to $1.

Image source: AMC Entertainment.

Source Fool.com