AMC stock nears the make or break price: buy or sell?

AMC Entertainment (AMC) stock price has moved sideways in the past few months as concerns about its upcoming maturities and the trends in the box office continues. It has been stuck at $5 since May, where it has been in the past few months. It remains about 109% from its lowest point this year.

AMC is lagging behind Cinemark

AMC stock price has dropped by over 58% from its highest point this year. The initial jump happened in May as meme stocks jumped following Roaring Kitty’s return to social media platforms like X. 

The stock has moved sideways on the past few months as investors focused on the company’s financial results and its huge debt load. Its performance has lagged the performance of Cinemark, the other big movie theatre company.

Cinemark’s stock has surged to $29, up by over 117% from its lowest point this year, making it one of the best-performing companies in the industry. It has also jumped to its highest point since February 2020, meaning that it has recovered all the losses it made during the Covid-19 pandemic. It has also become a bigger company than AMC with its market cap of over $3 billion.

A key concern among AMC investors is its ongoing dilution, which is higher than what Cinemark has done. Data shows that Cinemark’s total outstanding shares have jumped from over 117 million in 2020 to 122.3 million today.

On the other hand, AMC has been one of the most dilutive companies in Wall Street as the number of outstanding shares have jumped from over 5.96 million in 2020 to 361 million. This means that shares have jumped by over 5,000% in the last few years.

AMC continued to dilute its shareholders this year. The company raised over $124 million through equity offerings as its stock surged, and analysts expect this trend to continue in the coming years.

The most recent 10Q statement shows that the company has substantial operating lease payments coming up in the coming years. It has over $894 million in 2025, $831 million in 2026, $766 million in 2027, and $680 million in the following year. Altogether, the company has over $4.25 billion in lease liabilities. 

The most important liability is the cash that matures in 2026 when the company’s $2.6 billion cash matures. However, on the positive side, the company has negotiated its financing to postpone these payments to 2029 and 2030. 

This is a big decision since the company now has more leg room to handle its finances in the next few years. 

Box Office is recovering modestly

AMC Entertainment’s stock has reacted to the ongoing trends in the box office industry. Recent data shows that Inside Out made over $652 million in domestic sales followed by Deadpool & Wolverine, which made $621 million.

Despicable Me 4 made $360 million while Dune, Twisters, Godzilla x Kong, and Kung Fu Panda made over $193 million. These numbers mean that the industry is making a steady recovery and that people are still interested in going out for movies.

The most recent results showed that AMC’s revenue dropped from $1.03 billion in the second quarter, down from $1.3 billion in the same period in 2023. For the first half, its revenue dropped to $1.9 billion. This revenue drop happened across its top divisions like admissions and food and beverage. 

AMC also moved back to a big loss. It made a net loss to $32.8 million from the previous profit of over $8.6 million. 

Analysts expect that AMC Entertainment’s revenue will come in at $1.28 billion, down from the $1.29 billion it made in the same period in 2023. Additionally, analysts expect that its loss per share will be 13 cents, a reversal from the 0.08 profit it made last year. For the year, revenue is expected to come in at $4.58 billion followed by $5.17 billion next year.

AMC stock price forecast

The daily chart shows that the AMC Entertainment stock price has moved sideways in the past few months. As a result, the stock has been consolidating at the 50-day and 25-day Exponential Moving Averages (EMA).

The Average True Range (ATR) has continued falling, a sign that the volatility has dropped. Also, the accumulation and distribution indicator has continued moving downwards. 

Most importantly, the stock has formed a symmetrical triangle chart pattern, which is nearing the confluence level. This triangle is nearing the confluence level, meaning that a big move is expected to come up soon.

It is still unclear whether this will be a big upward or downturn move. At this stage, the next support and resistance levels to watch will be at $4 and $6. A cross above the triangle pattern will point to more gains.

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