The plot thickened for AMC stock holders. The stock crashed by more than 15% on Thursday, becoming one of the worst-performers in Wall Street. It has been in a freefall, crashing by almost 39% this year and by 90% in the past 12 months.

Dilution machine continues running

AMC Entertainment has become one of the biggest dilution machines in Wall Street as the management works to deal with the huge debt. It has increased the number of outstanding shares from less than 6 million in 2019 to over 260 million. 

The outstanding shares will continue increasing after the company offered to sell shares worth over $250 million on Thursday. The statement said:

“We believe that volatility and our current market prices also reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last.”

The company is facing numerous challenges. Fundamentally, the box office attendance is expected to be lower than in 2023. As you recall, last year had three big movies: Barbie, Oppenheimer, and Eras Tour. 

There are a few big movies that are planned this year. Dune 2 has been the best-selling movie so far, selling over $565 million worldwide sales. The other top movies scheduled for this year are Wonka, Aquaman, Hunger Games, and Beekeeper. I doubt that these movies will achieve the success we saw in 2023.

The biggest challenge that AMC Entertainment faces is its huge debt burden. The company has over $9 billion in total debt. Therefore, while this year’s maturities are manageable, AMC faces major challenges in the next few years. It has $5 million and $98 million in maturities in 2024 and 2025 followed by $2.9 billion in 2026. The company knows this and has even warned in its 10k, saying:

“Ultimately, if operating revenues do not normalize and we are unsuccessful in restructuring our liabilities, we would face the risk of a future liquidation or bankruptcy proceeding, in which case holders of the Company’s Common Stock would likely suffer a total loss of their investment.”

Taken together, AMC Entertainment has an extremely high debt load, is incinerating cash, and is not expected to have strong revenue growth this year. It is also bracing for a $2.9 billion maturities in 2026, which it will need to refinance. 

AMC Entertainment stock price forecast

AMC stock

In my last AMC forecast, I noted that the company was a high-risk and high-reward investment. I made the case for investing in the company, arguing that the stock was becoming highly oversold. 

This thesis has not worked out well as the stock has continued tumbling and is now at its lowest level on record. With the current stock sell, I have changed my mind and believe that the stock could have more weakness in the coming months.

This means that it could crash to below $3 as concerns about its ability to continue operating as a going concern remain. I also believe that the company will ultimately decide to raise more money in the coming months.

By Crispus Kanyaru

With a keen eye for market trends and a knack for translating complex financial concepts into engaging narratives, Crispus has established himself as a trusted voice in the world of finance. His work has graced the pages of esteemed publications like Benzinga, Forbes, Invezz, and Banklesstimes, reaching a diverse audience eager to navigate the ever-evolving financial landscape. Crispus's journey began with a deep curiosity about the forces shaping the global economy. This natural inquisitiveness led them to pursue a degree in finance and CPIA, equipping them with a solid foundation in financial theory and analysis. But Crispus knew that knowledge alone wasn't enough. He craved to bridge the gap between dry data and real-world experiences, to make finance accessible and relatable to everyone.

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