Major movie theater AMC Entertainment (New York Stock Exchange:AMC), a central figure in the “meme stock” movement, has suffered a significant stock price decline, with its stock price down more than 93% over the past year. Many investors remain hopeful of the expected turnaround and are hopeful that the upcoming fourth quarter results will be a positive catalyst for the stock. But AMC's history of stock price volatility and skepticism among Wall Street analysts make AMC stock an unpredictable bet.
AMC is scheduled to announce its fourth quarter financial results on February 28th. Analysts expect the company to report a narrower loss per share of $0.57, compared to $2.29 in the year-ago period.
planet of the apes
AMC Entertainment, based in Leawood, Kansas, is a leader in the theater business, managing more than 900 theaters and 10,000 screens in the United States and Europe.
AMC became popular among “monkeys” (a term often used to describe individual AMC investors) and achieved the status of a meme stock. From the end of 2020 to June 2021, the company's stock price soared by more than 2,800%. However, the following years saw a significant decline, with the stock falling 85% in 2022 and another 83% in 2023.
Still waiting for MOASS
The monkey pack remains strong, waiting for MOASS (the “mother of all short squeezes”) to push stocks back into the stratosphere. Expectations are high that AMC's upcoming fourth quarter earnings report will be the trigger.
The theory is that strong business performance can attract increased investment, leading to short selling ( market smiththe shorted stock represents approximately 15% of the total outstanding shares) to cover the short position and further increase the stock price.
Unfortunately, for those waiting for MOASS, there is no guarantee that a strong quarterly result will be a turning point. Last quarter, AMC's revenue rose 45% to $1.41 billion, beating profit estimates, but the stock fell 13.7% the following day.
Is AMC a buy, sell, or hold?
Analysts covering AMC stock are less hopeful about the company's near-term outlook, given the continued slowdown in core demand post-pandemic and the potential fallout from recent Hollywood strikes. I don't hold it.
Ahead of the earnings release, Wedbush analyst Alicia Reese maintained her investment rating on AMC with a “hold” rating and a $6 price target. She said Rees is positive about AMC's potential to gain further market share and the company to upgrade its European circuit, but she remains on the sidelines due to her large debt burden and no dividends.
Meanwhile, RossMKM analyst Eric Handler maintained his “sell” rating but lowered his price target from $5 to $4.
AMC is currently rated a Moderate Sell based on 3 Hold ratings and 2 Sell ratings. The average price target is a 51.4% upside from current levels.
Important points
AMC Entertainment, a pioneer of the “meme stock” era, has seen its stock price drop significantly over the past few years. Despite a strong belief among retail investors that this could be the cause of a short squeeze, the prospects for a turnaround remain an attractive but uncertain prospect. Historical patterns in price movements and professional analysts' outlooks suggest caution.
As AMC warned investors about fluctuations in price and trading volume in a recent filing, the stock is “highly speculative and involves risks…you risk losing all or a significant portion of your investment.” Please get ready.”