AMC Entertainment (NYSE: AMC) stock price has erased most of the gains made during the recent meme frenzy. It has plummeted by almost 60% from its highest point this year, lowering its market cap to about $1.9 billion.
More challenges remain
AMC Entertainment has benefited from the recent meme stock frenzy, which has helped it to raise some cash to boost its balance sheet. It raised $250 million by selling 75 million shares for an average of $3.50.
The new fundraising came after the company raised over $800 million in 2023 to support its balance sheet and deal with its mountain load of debt. It now has over $10 billion in debt and lease liabilities. Most importantly, it faces about $4 billion in maturities by 2026.
AMC’s cash raise is understandable considering that its business is not doing well as sales drop and is debt remains substantial. Its revenue dropped slightly in the first quarter and the management expects that the second quarter is not doing well.
The hope is that a new slate of movies scheduled for the remainder of the year will help it to do well. Bad Boys: Ride or Die, starring Will Smith and Martin Lawrence was the best-selling movie recently as it grossed over $56 million in the opening weekend.
AMC’s biggest challenge is that the number of tickets sold is still below historical levels because of the rise of streaming. Tickets sold in 2015 stood at over 1.32 billion. They dropped to 1.2 bilion in 2019 and then tumbled to 219 million during the pandemic in 2020. In 2023, despite the success of Barbie and Oppenheimer, the industry sold over 829 million tickets.
AMC Entertainment’s biggest challenge is that it will likely need to raise more cash as its losses rise. It had a net loss of over $163 million in the last quarter after losing additional $182 million in the fourth-quarter. While AMC is cutting costs, it will likely continue making losses for a while, with this quarter’s cash burn expected to be $355 million.
Analysts expect that AMC’s revenue will drop to $4.6 billion in 2024 from $4.81 billion in 2023. They also expect that its revenue will soar to $5.18 billion in 2025 when it will suffer a 41 cents loss.
AMC stock price analysis
Conducting an AMC share price analysis is quite difficult at a time when meme stocks are pumping and dumping regularly. On the daily chart, we see that the stock has moved sideways after the initial jump in May.
The stock is consolidating at the 50-day and 25-day Exponential Moving Averages (EMA) while the Average True Range (ATR) has drifted downwards. Therefore, the key support and resistance levels to watch will be at $4 and $5.50.
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