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AMC, airlines' fuel costs, Overstock: Trending Tickers

AMC Entertainment (AMC) stock plunged today after revealing plans to sell up to 40 million shares. Alaska Air (ALK), United (UAL), and Southwest Airlines (LUV) warn of rising jet fuel costs impacting ticket prices. Lastly, Overstock (OSTK) shares dive on its revenues tied to the relaunch of Bed Bath & Beyond's website.

Yahoo Finance Live examines several stocks making significant moves after Wednesday's closing bell.

Video transcript

SEANA SMITH: AMC shares are selling off after announcing plans to sell up to 40 million shares. The company saying that it plans to use the proceeds to bolster liquidity, to repay, refinance, redeem or repurchase its existing indebtedness here, and general corporate purposes. Well, AMC was widely expected to do this after the court ruled last month that it was allowed to convert preferred stock into common stock.

And, Akiko, AMC, the moves are so dramatic, a lot just talk about what the company needs to do to write this business. Clearly this has been a meme stock, a retail trader favorite now for a number of years. But when you take a look at the actual business of AMC, movie theaters, getting people back into the theaters to watch movies.

It's not only dealing with the fact that it has not recovered from some of the pre-pandemic levels, but then also coupling that with the Hollywood strike that's going on right now. And the fact that we're already seeing some studios push out releases to 2024. It's certainly a very tough time for AMC.

AKIKO FUJITA: Yeah, Seana, tough to say how much of AMC's stock actually trades on the fundamentals, but you're right. I mean, at the end of the day, the fundamentals are not good for AMC. They haven't gotten back to pre-pandemic levels in terms of getting people back into the theaters. You've got the Hollywood strike, that means less of a pipeline in terms of movies coming up.

And then at the end of the day, AMC just hasn't had a turnaround strategy in place. So much of this is about riding the meme wave. You look at where the company is right now, $9.5 billion in debt and lease obligations. So that's at least according to data compiled by Bloomberg.

But this is a company that's really struggled to find its footing in terms of its fundamentals and where they need to go to really change the strategy in the face of what we have seen in terms of attendance in theaters.

Well, taking a look at some of the airlines, as United, Southwest, and Alaska Air are sounding the alarm about higher jet fuel costs in the third quarter amid rising crude oil prices. Southwest now expects fuel costs between $2.70 to $2.80 per gallon during the third quarter. That's compared to prior estimates of 2.55 to 2.65. The airline said, overall leisure demand and yields continue to remain healthy.

And this comes, Seana, as we've talked about, this peak travel where travelers are willing to shell out those high ticket prices. And this has got to be a headwind for the company. But I will say, when you think about where oil prices were last year because they were very elevated, ticket prices going up. They haven't necessarily come down since.

And so you have to wonder what this means for the airlines who are riding this wave of consumers really wanting to go not just domestic travel, but international travel as well. Does this mean they have to raise prices even more or just keep it at where they were when prices were at the peak last year?

SEANA SMITH: Yeah, exactly. And then also what customers, what consumers are going to do if they're going to be willing to pay those higher prices, if in fact, airlines do decide to hike prices because we've already talked about the fact that maybe we could potentially start to see a bit of a cooling here. We're coming out of the summer season.

Yes, travel demand was very strong. We heard that from most of the airlines in their most recent reports. But heading into the fall season, we know that many of these airlines are not going to be able to charge the prices that we saw during the summer. Now adding in higher fuel prices obviously a headwind here for so many of these companies.

United, which has arguably been amongst the best position just given the exposure that they have to international travel and the pent up demand for people to travel internationally over the last several months.

But United, also one of those ones saying that they expect fuel costs now to come in 2.95 to 3.05 per gallon, which was much higher than expected. So we'll see what the airlines end up doing with this, if they do in fact hike their ticket fares and then what that demand picture looks like.

All right, let's also take a look at Overstock taking a big hit today. The stock off-- wow, look at that. Just about 23% after reporting declining revenue at Bed Bath & Beyond, Overstock bought the intellectual property assets of Bed Bath & Beyond in June and relaunched the website on August 1st. There was a bit of good news in this update, though. Bed Bath & Beyond is adding customers. And now have just around more than 4.8 million.

But declining revenue here, at least in terms of sales over the last several weeks since that relaunch on August 1st, they're seeing a decline in just about the mid teens for revenue on a year over year basis. Average order value falling in the high teens, percentage base from a year ago levels. A lot of this, at least from an analysts perspective is because of the higher promotional activity.

They're doing everything they can to expand their customer base. And obviously, at least for right now, their sales their revenue taking a bit of a hit.

AKIKO FUJITA: Yeah, I mean, just because Overstock took over those assets, doesn't necessarily mean, there's an immediate bump, right? At the end of the day, Bed Bath & Beyond went the way that it did because it was really struggling with the stores in being able to come up with attractive products and attractive value as well.

So Overstock really taking on that problem themselves as well. I mean, you could argue, it hasn't been very long since this all happened, so it's still need a little more time. But it really points to the massive task that they have in trying to turn around these assets because it has been many years in the making.

SEANA SMITH: And, yeah, certainly. It looks like it's going to be potentially a long road ahead.