AMC reverse stock split, APE conversion remove ‘overhang,’ analyst says in upgrade

Aron added that the firm also notched positive adjusted EBITDA in each quarter of the full year for the first time since pre-pandemic 2019. Unfortunately, February has yet to see the stock make a serious rebound. And after reporting fourth-quarter results, AMC is trying to stage a third weekly gain in five weeks. AMC CEO Adam Aron described the court’s approval as a “significant milestone” in a letter to investors earlier this month.

  1. AMC’s latest earnings report for the second quarter was a bright spot against a dismal performance for the stock.
  2. 5 Wall Street analysts have issued “buy,” “hold,” and “sell” ratings for AMC Entertainment in the last year.
  3. The units had only been publicly traded on the New York Stock Exchange for a year, and the conversion only went ahead after a settlement was reached with its shareholders.
  4. Adam Aron has an approval rating of 63% among the company’s employees.

The 1-10 reverse split was announced on Monday, August 14th 2023. The number of shares owned by shareholders was adjusted after the market closes on Wednesday, August 23rd 2023. An investor that had 100 shares of stock prior to the reverse split would have 10 shares after the split.

Earnings and Valuation

On Sept. 1, the company reported that pop music icon Taylor Swift’s concert film shattered records for single-day ticket sales revenue at $26 million. The movie-theater chain has been on a roller-coaster ride over the past few years that took it from beleaguered pandemic victim to meme-stock phenomenon. AMC used the steep rise in its share price to tap into equity and debt markets, raising $917 million in January 2021. Despite a strong latest quarterly earnings beat, AMC is still struggling to stay afloat – and is being pretty open about its financial woes. That hasn’t helped the share price recover, nor does it look set to do so anytime soon if AMC plans more share sales. AMC Entertainment Holdings, Inc., is the world’s largest movie theater chain with over 11,000 screens.

The company was founded in 1920 by the Dubinsky Family and is headquartered in Leawood, Kansas. The company has been in business for over 90 years but went public in 2013 after getting bought out by an investment group seeking to boost the company’s global presence. That investment group, Beijing-based Wanda Group, is still the company’s largest shareholder. The company on Aug. 18 issued a new 8-K filing to the SEC with details on the conversion of the APEs. The conversion resulted in the trading of a single class of AMC shares and the completed 1-for-10 reverse split of common shares.

This puts Adam Aron in the bottom 25% of approval ratings compared to other CEOs of publicly-traded companies. The company is scheduled to release its next quarterly earnings announcement on Friday, May 3rd 2024. Ahead of the offering, the company showed 158.4 million shares outstanding.

Price Target and Rating

AMC’s latest earnings report for the second quarter was a bright spot against a dismal performance for the stock. AMC reported earnings of 1 cent per share on revenue of $1.35 billion, far surpassing analyst expectations of a loss of 4 cents per share on $1.29 billion revenue. AMC Entertainment saw a increase in short interest in the month of February. As of February 29th, there was short interest totaling 31,750,000 shares, an increase of 8.1% from the February 14th total of 29,360,000 shares. Based on an average trading volume of 15,950,000 shares, the days-to-cover ratio is presently 2.0 days.

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Why Big Bank Stocks Are No Longer Cheap

A powerful rebound could force short sellers to cover their positions, helping to propel shares even higher. Aron also highlighted actions including closing marginally performing movie theaters, opening higher-revenue new cinemas, and a “continued focus to manage expenses in a challenging inflationary environment.” Ironically, the stock price plunge might boost short interest and start the memestock cycle all over again. It’s all fun and games, but AMC has to get serious about fixing its free cash flow or risk bankruptcy. At $435.3 million for the second quarter, that’s down 12% year over year and has plummeted 75% in the last two years. In short – it makes sense why AMC is still forging ahead with its share sale plans despite a relatively positive earnings beat.

This story examines fundamental, technical and fund ownership factors to determine if the Leawood, Kan., company with 900 theaters and 10,000 screens scores a good probability of making money for stock traders. We’d like to share more about how we work and what drives our day-to-day business. A more straightforward question to answer might be, what isn’t happening? Before this week’s announcement, a flurry of activity in AMC stock in recent weeks has left investors uneasy. The sale could represent as much as 7.7% of the 519.2 million shares outstanding. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions.

A grade of C+ or higher points to institutions, on net, accumulating shares. AMC’s movies industry group recently rose to as high as No. 20 among IBD’s 197 industry groups in terms of six-month price-weighted performance. Volume skyrocketed to 84.9 million shares during the Sept. 6 sell-off — a clear sign that institutions unloaded shares. Turnover jumped to the highest amount so far this year and almost eight times the stock’s average turnover over the past 50 sessions. After the company reported third-quarter results on Nov. 8, shares dropped more than 25% for the week in accelerating turnover. AMC stock started that year at 27.20 (before the reverse split) and ended at 4.07, a miserable loss of 85%.

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