AMC stock price forecast: Pain ahead as bottoming signs emerge

November 09, 2023 07:08 AM PST | By Invezz
Follow us on Google News:

AMC Entertainment (NYSE: AMC) stock price continued its remarkable sell-off on Thursday after the company moved to dilute its shareholders some more. The shares plunged to a low of $8.30, which was almost 90% from the highest point this year.

AMC further dilution

AMC Entertainment has been one of the worst-performing companies in Wall Street this year. This performance is mostly because of its habit of diluting its shareholders. Its outstanding shares have surged to over 198 million, up from over 58 million in September last year. 

The company is committed to continuing its dilution trend. On Thursday, the firm said that it will raise additional capital worth $350 million to boost its balance sheet. This is a substantial amount considering that AMC has a market cap of $2 billion.

AMC has already diluted its shareholders by raising $550 million earlier this year. It also did that by converting its APE shares into AMC.

Share issuances are usually quite dilutive since they increase the number of outstanding shares. Worse, there is a likelihood that AMC Entertainment will issue more shares again in the next 12 months.

The decision to issue more shares came a day after the company published strong financial results. Its revenue jumped by 6.8% to $1.4 billion while the cash generated by its operating activity soared to $289 million.

These stellar results should be taken with a grain of salt. For one, the third quarter was loaded with some of the biggest box office releases of the year like Barbie, Mission Impossible, and Oppenheimer. It was also complemented by the recent movie by Tylor Swift, the most popular artist in the world. 

Therefore, there is a high possibility that the fourth quarter will be weaker than Q2 since no major blockbusters are scheduled. Some of the top box office movies to watch will be The Marvels and Godzilla Minus One.

AMC is a good company with a major market share in the United States. This share gives it a good leverage when negotiating with its landlords. The challenge for the company is that it carries a lot of debt in a high-interest-rate environment. It also has a long history of diluting its stockholders.

AMC stock price forecast

AMC stock price

AMC chart by TradingView

The daily chart shows that the AMC Entertainment stock price has been in a consolidation phase in the past few months. It has remained between the support at $6.50 and resistance at $11.14. The shares have remained below the 50-day Exponential Moving Average (EMA).

This consolidation has continued at a time when the Average True Range (ATR) has crashed to the lowest point in more than a year. This ATR is a sign that the stock is not volatile. A closer look shows that the volume has remained quite high during this consolidation phase.

This could be a sign that the stock is in the accumulation phase of the Wyckoff Method. Therefore, while the fundamentals are quite weak, I suspect that the shares will bounce back in the coming months as it moves to the markup phase. This view will be confirmed if the stock moves above the upper side of the channel is at $11.15. 

The alternative scenario is where the shares drops to the lower side of the channel at $6.50. A break below that level will see it drop to the support at $5.

The post AMC stock price forecast: Pain ahead as bottoming signs emerge appeared first on Invezz


The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.

Top Listed Companies