AMC Announces Shareholder Rewards To Sustain Pandemic Investors

After a difficult year and a slow reopening, AMC has embraced a new influx of retail investors and solidified its place as an honorary ‘meme stock’. With shares reaching an all-time high this week, the theater chain announced a few new perks as a thank-you to its dedicated investors.

The brand launched a portal on its website to communicate with its individual retail investors, allowing stockholders to sign up for a loyalty program with special offers and company updates. The AMC Investor Connect portal aims to communicate more directly with investors to promote long-term loyalty and sustain social media inspired ‘meme stock’ investors. The chain also offers a free popcorn to entice current shareholders to sign up and promotes an exclusive investor update, all within their current AMC Stubs platform.  

This is a more strategic move for AMC, in an attempt to capture some of the shareholder gains it experienced in the past year. While its success may not be directly related to its strategy or business model, the brand is clearly trying to initiate greater brand loyalty in the investors sparking this consistent growth. 

It ultimately acts as an interesting case study that may provide insight into recent research on the correlation between stock ownership and customer brand loyalty. 

Does Stock Ownership Drives Customer Loyalty?

In their study on stock ownership with customer loyalty, Columbia Business School researchers note that retail investors are more likely to increase their spending at companies in which they own stock. 

The study, “Bumped: The Effects of Stock Ownership on Individual Spending,” found that consumers are more inclined to financially support and reward brands they have a stake in, regardless of the number of shares they own. By analyzing the transaction data of Bumped users, an app that gives members free stock rewards for spending with certain brands, the research found that stock owners actually increased their spending by 30 to 40%. This elevated spending was also likely to last for three to six months after the initial ownership date.

Vox News’ coverage of the study included an interesting perspective, indicating that the presence of more fractional shares may be a key factor in this relationship. With consumers now able to invest smaller amounts of money, using services like Robinhood, they have greater access to the once exclusive investor title. Because of this, individuals are now more likely to invest in brands that they may already actively support. Additionally, once they do invest, consumers are becoming more consciously aware of these brands and may be more interested in things like product launches and company updates.

However, it’s also worth considering whether these smaller-scale, first-time investors are more likely to become loyal customers out of novelty. With limited portfolios and less knowledge about the stock market in general (in the case of customers receiving stock freely), they may be more inspired to support the company in the short term rather than acting as a true brand advocate. 

AMC Case Study

With the AMC case, it will be interesting to see if the influx of retail investors will translate into greater brand loyalty or, at the very least, prompt spending in its theaters. CEO Adam Aron stated, "Many of our investors have demonstrated support and confidence in AMC,” and furthered, “We intend to communicate often with these investors, and from time to time provide them with special benefits at our theaters."

If the company continues to include initiatives that support investors, who now own more than 80% of the company, they may be more likely to hold their shares for the time being. But because the initial investors may not have been driven by traditional financial metrics it could eventually indicate a drop off once ‘meme stock’ crazes die down. On the other hand, because this influx of investors was inspired to save the company, investors may have formed at least some sense of emotional attachment to the brand, which could instill loyalty in the future.

Additionally, AMC has been fairly transparent about the source of this ‘meme stock’ influx, which may boost trust with current investors. The brand acknowledged the risk of losing “all or a substantial portion of your investment,” in a recent regulatory filing, shedding light on the unpredictable nature of the stock. This may set AMC apart as one of the more open and sincere ‘meme stock’ companies. 

Ultimately, an increase in loyalty due to stock ownership makes sense, individuals obviously want to support companies they have a stake in. But cases like AMC can give us insight into whether this loyalty is mainly formed prior to ownership or can be incited through spontaneous or group-inspired investments like ‘meme stocks’. Additionally, it will be interesting to see whether AMC can form genuine relationships with stakeholders and sustain loyalty through rewards programs and more direct communication efforts.