AMC (NYSE: AMC) stock price continued to underperform the market in the first half of the year amid rising dilution concerns. It crashed by over 18.6% while the S&P 500 and Nasdaq 100 indices rose by over 15%.
AMC’s performance was a continuation of what has been happening since it peaked at almost $400 during the meme stock frenzy. As a result, its market cap has crashed from over $36 billion in 2021 to $1.8 billion today.
Inside Out 2 is doing well
AMC Entertainment and other theatre chains did well in 2023, helped by the Barbie and Oppenheimer craze. As a result, the company’s total revenue rose from over $3.5 billion in 2022 to over $4.3 billion. The robust sales helped it reduce its net profit from $973 million to over $396 million.
The biggest concern among investors has been whether the company can continue to see robust sales this year, especially after the huge strikes in 2023.
Fortunately, there are signs that the box office is bouncing back, as evidenced by the success of Inside Out 2. As my colleague wrote, the movie has grossed over $1 billion, the first film to do so since Barbie in 2023. In a statement, Michael O’Leary, the president of the National Association of Theater Owners said:
“The film’s stunning global success once again illustrates that audiences the world over will respond to compelling, entertaining movies, and that they want to enjoy them on the big screen.”
Fortunately, some more big movies could help to supercharge the box office industry. Despicable Me 4 is expected to come out on July 3rd while Deadpool & Wolverine will come out on July 26th. The Fabulous Four will be released later this month while Twilight of the Warriors, The Crow, and Transformers will be released later this month.
To be clear: AMC has warned that the movie industry will not recover fully this year. Also, its financial results were not all that good as its revenue dropped from $862.8 million to $851 million.
However, as I have written before, these results were encouraging considering that the impact of last year’s strikes are still being felt today. Most importantly, the company also narrowed its quarterly loss from over $235 million to $163 million.
Therefore, the company will likely continue its slow recovery in the next few years since there is evidence that there is demand for movies.
The biggest risk that AMC stock investors is that the company could continue to dilute them because of its huge debt burden. It holds almost $10 billion in debt and lease obligations, with substantial maturities expected to come in the next few years.
While this debt is substantial, the company is in talks with its debt holders, a move that could see it reduce its debt load and extend maturities. It is unclear whether these negotiations will yield results but there is hope.
AMC stock price forecast
The daily chart shows that the AMC share price has moved sideways in the past few weeks. It has remained below $5 after surging to $11.2 in May. The stock has continued to consolidate at the 50-day and 25-day Exponential Moving Averages (EMA).
There are signs that AMC has moved into the accumulation phase of the Wyckoff Method, which is characterized by low volatility. In most cases, this phase is then followed by the markup one, where there is more demand vs supply.
The stock has remained at the 50-day and 100-day Exponential Moving Averages (EMA) while the Average True Range (ATR) has retreated. Therefore, the stock will likely have a bullish breakout as buyers target the key resistance at $10. However, it could remain in this consolidation for a while.
The next key catalyst for the stock will happen later this month when it publishes its financial results.
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