Why AMC Entertainment Skyrocketed 160 4% in May The Motley Fool

The analyst, who has a Neutral rating and $4 price target, said rising expenses also factor into the company’s storyline. Analysts expect AMC to report a loss of 79 cents per share in the first quarter, compared to a loss of $1.30 per share in last year’s first quarter. Disinflationary trends persist, with CPI showing a steady decline, despite media drama over slightly higher-than-expected figures; energy stocks remain attractive for long-term investors. AMC and GameStop were once the go-to stocks for day traders looking to make a quick buck—but they’ve lost their crown to the likes of Trump Media this election cycle.

1. The number of shares owned by shareholders was adjusted after the closing bell on Wednesday, August 23rd 2023.
2. AMC’s business could grow as a whole, but investors won’t benefit if all of these new shares flooding the market negate any per-share improvement.
3. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions.
4. On May 26, sell-side firm CFRA upgraded AMC, but only from “Sell” to “Neutral” and giving an $18 price target.
5. AMC Entertainment’s stock was trading at $6.12 at the start of the year.

AMC Entertainment Stock Analysis – MarketRank™

AMC Entertainment Holdings, Inc., is the world’s largest movie theater chain with over 11,000 screens. The company was founded in 1920 by the Dubinsky Family and is headquartered in Leawood, Kansas. The company has been in business for over 90 years but went public in 2013 after getting bought out by an investment group seeking to boost the company’s global presence. That investment group, Beijing-based Wanda Group, is still the company’s largest shareholder. All in all, AMC has raised $1.246 billion this quarter, adding to the $813.1 million in cash it had at the end of the first quarter. The company is still likely burning through cash, so it likely has a little less than $2 billion in cash against a still-high $5.46 billion in debt — and some of that at very high interest rates.

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The company’s share count has also nearly quintupled from pre-pandemic levels to 502 million shares outstanding. The problem for shareholders is that this results in potentially massive dilution down the road. Converting these preferred units to common stock could increase the existing share count by nearly threefold, which would likely kill per-share investment returns barring a remarkable recovery by AMC’s business. In 2019, before the pandemic, AMC reported bdswiss forex broker review “adjusted” free cash flow of $358 million — and that figure incorporated some generous adjustments. Still, assuming AMC can get back to its prior free cash flow on the new quintupled share count, that’s only about $0.71 per share.

Until its financials improve to the point that massive dilution is off the table, owning the stock is risky, even after its 90% decline. A survey by Morning Consult earlier this year indicated that 62% of respondents felt comfortable enough to attend a movie in a theater, a sign that people are moving past the pandemic. Still, 55% said they are more interested in watching movies from their homes, and 50% blamed high prices as a reason to avoid theaters. In other words, theaters aren’t delivering an experience that justifies the effort and money. AMC Entertainment’s stock reverse split on the morning of Thursday, August 24th 2023.

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So, at the current stock price, shares are valued at 67.5 times 2019 adjusted free cash flow per share. Murdick had also owned AMC’s debt, likely at distressed prices, so the equity raise may have been a ploy to increase the value of its debt by increasing AMC’s creditworthiness. Although a savvy trade by Murdick, it apparently sold too early as well, as AMC’s shares skyrocketed over 100% the next day, reaching a high of $72.62, and prompting trading halts. Incredibly, AMC was allowed to sell another 11.5 million more shares to the public the following day at $50.85 per share, raising a whopping $587.4 million while only minimally diluting shareholders. On May 26, sell-side firm CFRA upgraded AMC, but only from “Sell” to “Neutral” and giving an $18 price target.

GameStop became the chief beneficiary of the first round of meme stock mania How to buy cardano in late 2020 when Ryan Cohen, the co-founder of pet supplies group Chewy, announced he had a plan to revive the fortunes of the flagging company. On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. Meanwhile, AMC stock has declined by more than 8% during the past month. This is likely the result of the dilutive effects of issuing new shares. With more cuts in the pie, each shareholder’s stake, or piece of the pie, gets smaller.

For Moviegoers Seeking out an “Extra Large” Screen at the Movies, AMC Theatres® Unveils XL at AMC

By driving up the price and “squeezing” these short sellers, Gill and his cohort created massive losses for the skeptics, which included large hedge funds and institutional traders. These firms have been generally unloved by most mainstream investors, as reflected in their previously desultory share prices. It’s fundamental analysis vs. technical analysis rundown still worth $6 — less than the $10 price at which investors bought shares. Ironically, the more shares the company sells above intrinsic value, the closer intrinsic value will move toward the sale price, but it will never exceed that value. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. The stock has fallen enough that it’s within shouting distance of pre-COVID-19 valuations, and investors can have a real conversation about buying the stock as a long-term investment.