September 24, 2023

AMC Entertainment Holdings Inc stock jumped more than 21% on Monday on the eve of the meme-stock darling’s fourth-quarter earnings call.

The movie theater chain’s stock has rallied recently, climbing 46.2% over the past five days. However, the preferred equity units of the AMC APE,
-5.09%
It fell 3.9% on Monday and has fallen 13.5% over the past five days. s&p 500 index spx,
+0.31%
It rose 0.2% on Monday and has fallen 2.5% over the past five days.

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Analysts polled by FactSet expect AMC AMC,
+22.74%
To disclose a fourth-quarter loss of 21 cents per share, or a loss of 19 cents on an adjusted basis, when the company reports after the market close on Tuesday. According to FactSet, Walt Disney Co. With a boost from DIS, sales are expected to be $1.027 billion,
+0.15%
“Avatar: The Way of Water”, which became the top-5 film of all time at the box office.

According to CEO Adam Aaron, an increase in movies releasing theatrically this year could aid AMC’s recovery. He recently noted that 35% more movies will be released in 2023 than in 2022, as the movie-theater industry attempts to recover from a COVID-19-related downturn.

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AMC CEO Adam Aaron extends film release to 2023, says ‘finally the way to recover from pandemic’

Wedbush analyst Alicia Reese wrote in a Monday note that theatrical exhibition is “on the path to normalization” with a better slate of releases in 2023.

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He wrote, “AMC has plenty of cash to continue operating through an improved theatrical environment with its vast network of premium large format screens in 2023, while chipping away at its massive debt balance.” “AMC is likely to continue expanding with high-quality screen acquisitions as they become available from faltering competitors, while continuing to plunge into various new business ventures to drive new incremental revenue streams.”

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Wedbush Rates AMC Underperforms with a $2 price target.

The company is also engaged in a fight to eliminate its debt burden. In an SEC filing last month, AMC announced a special meeting of shareholders to increase the number of AMC authorized shares from 524 million to 550 million and authorize a 1-for-10 reverse split of the company’s common stock, APE converted into shares. of common stock. According to an SEC filing, the special meeting of shareholders is scheduled for March 14, 2023.

AMC stock jumps nearly 20% in 2 days, moves closer to long-term technical breakout

AMC has been on a roller-coaster ride over the past two years that has taken it from crippling pandemic victim to meme-stock phenomenon. The company used the massive increase in its share price to tap into the equity and debt markets by raising $917 million in January 2021.

In November, the AMC announced its 12th consecutive quarter of loss. The company’s sales were $968.4 million, compared to $763.2 million in the same period last year. AMC exited its fiscal third quarter with $5.325 billion in debt and $684.6 million in cash and cash equivalents.

AMC describes itself as the world’s largest movie-theater company, with approximately 950 theaters and 10,500 screens worldwide.

The movie theater chain’s stock is up 85% this year, although David Trainor, CEO of independent equity research firm New Constructs, believes AMC is a “zombie” stock at risk of falling to $0 per share. “This rally is completely unwarranted and shows that many investors still haven’t learned their lesson about allocating capital wisely,” he said in a note on Monday. “This rally is an opportunity for those who bought this stock to take a risk before selling it.”

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“AMC Entertainment’s stock is at risk of a decline to $0 per share due to its large free cash flow burn, insufficient profits to cover its debt interest payments, poor competitive positioning and inability to sustain positive cash flow for a meaningful period of time.” Inability,” added the trainer.

Of the seven analysts surveyed by FactSet, three have a hold rating on AMC shares and four have a sell rating.