Why AMC Networks (AMCX) Stock Is Nosediving

What Happened:

Shares of television broadcasting and production company AMC Networks (NASDAQ:AMCX) fell 8.4% in the pre-market session after the company reported first quarter results. The company's operating margin missed, and its EPS fell short of Wall Street's estimates. On the other hand, free cash flow beat handily. AMC Networks also strengthened their balance sheet by completing a series of financing transactions to extend debt maturities. Overall, this was a mixed quarter for AMC Networks.

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What is the market telling us:

AMC Networks's shares are quite volatile and over the last year have had 43 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 20.7% on the news that the company reported fourth-quarter results with operating income and EPS falling below Wall Street's expectations. On the other hand, revenue beat by a small margin, though it continued to decline in the absolute term, falling by 29.6% year on year. The decline was mostly driven by the domestic operations business, which fell 32% year on year. International revenue also fell 9% yearly, showing broad-based topline weakness. A bright spot was that free cash flow came in better than expected. From a product perspective, the company pointed out that AMC+ (the streaming platform) launched "an ad-supported tier in the third quarter, with strong new sign-up activity on available platforms since launch." 

Overall, this was a weak quarter for the company, which continued to endure industry-level headwinds given the growing shift from traditional TV to streaming services.

AMC Networks is down 32.9% since the beginning of the year, and at $12.85 per share it is trading 37.7% below its 52-week high of $20.62 from December 2023. Investors who bought $1,000 worth of AMC Networks's shares 5 years ago would now be looking at an investment worth $230.65.

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