Why AMC Entertainment was Falling 15% Wednesday

It hasn't been a good week for the theater chain operator.

What happened

Shares of AMC Entertainment Holdings (NYSE:AMC) were down over 15% on Wednesday, continuing the plunge it took yesterday following Walt Disney's (NYSE:DIS) announcement that two of its most anticipated movies would be released simultaneously to theaters and the Disney+ streaming service.

So what

AMC and other cinema chains have been waiting for movie studios to begin releasing their films to theaters so they could begin gettingmovie goers back in front of the big screen. Releasing films to streaming services at the same time they're showing in theaters undercuts the ability of theaters to recover quickly.

IMAGE SOURCE: GETTY IMAGES.

Yet many studios need to support in-house streaming services, so releasing first-run films to them helps juice subscriber numbers. Earlier this month Disney+ surpassed the 100-million-subscriber threshold, but it can't afford to relent now.

Not only is there more competition, but Disney also rankled many with its controversial firing of actress Gina Carano from its hit showThe Mandalorian, arguably the only certifiable hit Disney+ has had.

By releasing both the Marvel Comics spinoffBlack Widowand the live-action101 DalmatiansremakeCruella to Disney+, it may mitigate the #CancelDisney hashtag that was trending on social media.

Now what

AMC has sufficient capital now to survive into 2022, but that's predicated on theaters having a window of exclusivity for films. While Warner Bros. just gave Regal theaters a guarantee of 45 days in 2022, its slate of films this year will also see simultaneous releases. That could be a problem.