AMC Entertainment (New York Stock Exchange:AMC) Shares fell more than 14% yesterday after the company disclosed a $250 million at-the-market (ATM) offering of its common stock. AMC aims to strengthen its balance sheet by selling shares. The move comes after the company's first-quarter results were affected by a slump in box office sales due to a strike by Hollywood writers and actors in 2023.
The Company intends to use the proceeds from this sale to strengthen its liquidity position, repay debt and for general corporate purposes.
It is worth mentioning that AMC completed a similar ATM offering in December 2023, raising approximately $350 million. As of December 31, 2023, AMC's financial position reflected total debt (including finance leases) of $4.56 billion and cash reserves of $884.3 million.
Is AMC a buy, sell, or hold?
AMC's performance is expected to suffer in the short term due to film release delays caused by last year's strike. Moreover, AMC's high level of debt and continued fundraising activities continue to weigh on investor sentiment.
At TipRanks, AMC has a Moderate Sell consensus rating, based on 4 Hold ratings and 3 Sell ratings. Analysts' average price target for AMC stock of $5.22 suggests upside potential of 40.3%. The company's stock price has fallen about 53% over the past six months.
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