AMC Entertainment’s (NYSE:AMC) top at $20.36 on Jan. 27 may have marked a peak. The stock promptly sold off to $6 but then the share price almost doubled.
AMC is on an uptrend, with buyers optimistic about its prospects following its earnings report posted on March 10. AMC posted Q4 revenue falling ~90% to $162.5 million. It lost $327.5 million on an adjusted EBITDA basis. Looking ahead, a movie theatre chain reopening this week is attracting bulls. The bad news is that losses will probably continue throughout the year.
AMC ended the quarter with over $300 million in cash. It already sold shares and issued more debt to avert bankruptcy. AMC raised $2.2 billion from new debt and equity capital. It controlled costs by securing more than $1 billion in concessions from creditors and landlords. The $600 million in convertible notes is another headwind for investors.
Financial backers would rather see AMC survive than file for bankruptcy. Pent-up demand for viewing movies in a theatre awaits. Just as airline traffic will grow, cruise ship and travel booking are back-loaded. The closer the world gets to ending the pandemic, the better the upside for AMC.
Your Takeaway
AMC stock is trading on pent-up hope. The speculation could continue lifting the stock. Trade the bounces while selling if the momentum loses steam.