AMC shares fall more than 22% ahead of stock conversion

Wold currently holds a $4.50 price target for the stock, on the high end of analysts who cover AMC. On a split-adjusted basis, that is AMC’s lowest close on record, according to FactSet. “So they hired smart lawyers who figured out a way to work around the issue, by issuing out preferred shares,” Davidoff Solomon said. Ironically, the stock price plunge might boost short interest and start the memestock cycle all over again. It’s all fun and games, but AMC has to get serious about fixing its free cash flow or risk bankruptcy.

In short – it makes sense why AMC is still forging ahead with its share sale plans despite a relatively positive earnings beat. AMC shares closed at a record low on Wednesday, plunging 37% to hit a price of $8.62. That’s on top of a 35% share price slide that happened after AMC converted its stock in August, taking AMC’s share price down 83.7% since the start of the year. Let’s first revisit the hyper-fast run during the meme stock boom of 2021.

Wednesday’s drop was the biggest one-day sell-off AMC stock has seen since February 2021. The previous record-low stock price close was $10.73, seen in January 2021, with Wednesday’s close considerably under that. 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.

  1. In 2022, AMC posted a full-year adjusted net loss of $6.95 a share vs. a net loss of $11 in 2021, according to MarketSmith data.
  2. AMC also said it achieved diluted earnings of 8 cents a share vs. a net loss of $2.20.
  3. After sinking almost 34% last month, shares have reversed off lows and moved higher in February so far, up more than 10%.

AMC shareholders had good reason to look forward to another rebound. However, a key change in the capitalization of the stock led to a massive decline during August and September. On Jan. 31, after the Federal Reserve’s first meeting of 2024 on interest rates concluded, the stock finished 1.5% lower to a record low of 4.05 and dropped nearly 34% for the month. “My negative view towards the shares is really a valuation call,” Handler said. “We continue to believe the company’s shares are trading at an irrational valuation.” Wold sees the stock conversion as a way for AMC to weather the global exhibition industry’s prolonged post-pandemic recovery as well as any future impacts from the ongoing writer and actor strikes in Hollywood.

Over a two-day period on Sept. 6-7, the stock fell a combined 43% after the company announced a plan via a filing to the Securities & Exchange Commission to sell up to 40 million in additional common shares. “In anticipation of the first day of advance ticket demands, AMC has bolstered its ticket server capacity to handle traffic at more than 5 times the current record for the most ever tickets sold in an hour,” AMC said in a news release. On Sept. 1, the company reported that pop music icon Taylor Swift’s concert film shattered records for single-day ticket sales revenue at $26 million.

Price Target and Rating

They include an improved 70 Earnings Per Share Rating on a scale of 1 to 99, up sharply from 23 in recent months. AMC’s ratings in IBD Stock Checkup are still showing extremely bearish tints. Keep in mind that blockbuster movies or TV shows don’t necessarily lead to an equally sizable windfall for the theater operators. This story examines fundamental, technical and fund ownership factors to determine if the Leawood, Kan., company with 900 theaters and 10,000 screens scores a good probability of making money for stock traders.

Shares of movie-theater chain and original meme-stock darling AMC have been clobbered recently

An excellent set-up means the big boys and girls on Wall Street are more inclined to buy and hold shares, not dump them. Once a strong chart pattern has been established, an IBD-targeting breakout offers traders the best opportunity to reap gains at the start of a potential big run. To get this ideal entry in a cup without handle, simply take the cup’s left-side high.

AMC Entertainment Holdings Inc. Cl A stock outperforms competitors on strong trading day

Shares of AMC Entertainment reverse split before market open on Thursday, August 24th 2023. The number of shares owned by shareholders was adjusted after the market closes on Wednesday, August 23rd 2023. An investor that had 100 shares of stock prior to the reverse split would have 10 shares after the split.

“Once AMC completes these actions, it will have the authorization to issue up to 550 million additional shares without further shareholder approval,” said Reese. “AMC may use the opportunity to repay some or all of its debt balance while AMC shares are still trading at a premium.” The U.S. movie business remains below pre-pandemic levels, and the ongoing strikes in Hollywood have clouded the release slate for the rest of 2023 and 2024. AMC and pop star Taylor Swift announced last week that the theater chain is serving as the distributor for a concert movie of The Eras Tour to be released in October. Now, AMC’s plan to convert its preferred shares into more common stock has a lot of investors nervous that the move will basically dilute the stock’s value. At $435.3 million for the second quarter, that’s down 12% year over year and has plummeted 75% in the last two years.

What else is happening with AMC stock?

Once shares start picking up some serious gains, watch for a new bullish chart pattern will form. At this point, AMC will definitely need weeks, if not months, to build a proper new base in bullish fashion. Not all breakouts jd edwards stock work, especially when the stock market uptrend goes under pressure or into a correction. When IBD notes the market in a confirmed uptrend, it signifies that buying demand is healthy among institutional investors.

Set against this backdrop, Wedbush raised its AMC (AMC) price target to $19 from $2 Thursday. “AMC’s court case resolution removes a significant overhang, and we expect AMC shares to settle around our new $19 price target post-conversion and post-reverse-stock-split,” said Wedbush analyst Alicia Reese, in a note. The company on Aug. 18 issued a new 8-K filing to the SEC with details on the conversion of the APEs. The conversion resulted in the trading of a single class of AMC shares and the completed 1-for-10 reverse split of common shares.

AMC Entertainment’s stock is owned by a number of retail and institutional investors. (0.00%), Norges Bank (1.04%), IMC Chicago LLC (0.00%), Northern Trust Corp (0.50%), Swiss National Bank (0.20%) and Charles Schwab Investment Management Inc. (0.18%). The addition of snacks and drinks to the offering was a major boost to revenue. As of mid-2022, F&B is the second largest source of income for the company after box-office sales and accounts for roughly 28% of the revenue. Among the many innovations are the world’s first multiplex (a location with more than one screen), the addition of cup holders to the chairs in 1981, and a website with showtimes and listings nationally.

The company then used the proceeds to repurchase debt or exchange debt for equity, resulting in a liabilities reduction of $62.28 million. Wedbush’s Reese notes that AMC’s reverse stock split takes place Thursday, reducing its common share count to 52 million. “Then on Friday, AMC’s 995 million APE shares will convert to roughly 100 million AMC shares,” she said, adding that APE shares will no longer trade as of Friday. “On August 28, AMC will pay out one additional share per every 7.5 owned as of closing on August 24, resulting in 59 million pre-conversion AMC shares — a 13% increase in the pre-conversion AMC share count.”

If anyone thinks AMC wants to get into a litigation fight with its shareholders over conversion plans and stock sales for fun, they’re wrong. It’s all being fought to pay off some of AMC’s considerable debt mountain, which Bloomberg puts the figure at $9.5 billion. The cinema has previously used the now-defunct APE shares to pay off $548 million in debt. On Aug. 24, trading in AMC stock reflected the 1-for-10 reverse stock split. That is, a holder of 10 shares of AMC now owns just one share, but the share price got multiplied by 10.

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