AMC Shares Drop 4.7% as Investors Have Doubts Regarding Company’s Debt Recovery Plan

UTC by Steve Muchoki · 3 min read
AMC Shares Drop 4.7% as Investors Have Doubts Regarding Company’s Debt Recovery Plan
Photo: Depositphotos

With over 946 theatres and a better liquidity position, AMC anticipates performing better in 2023 than in 2022.

AMC Entertainment Holdings Inc (NYSE: AMC) – the largest movie theatre chain in the world – has been sinking into its debt crisis. AMC shares closed Wednesday trading at $3.84, down 4.71 percent from the day’s opening price. The $2.1 billion valued company has seen its stock market plummet over 77 percent YTD. Notably, most of the AMC shares’ volatility has been recorded in the past few months, whereby the company’s stock market is down approximately 46 percent and 27 percent in the last month and five days respectively.

After recording a successful 2021, following the meme stock frenzy, AMC was able to revert its bankruptcy shockwaves. Nonetheless, the company has not been able to maintain its momentum in 2022.

From a technical standpoint, AMC shares are retesting 2020 highs and are likely to fall to ATL around $1.15. However, the company’s leadership is working towards raising more money to reduce its debt standings. Earlier this week, AMC announced that it plans to raise new equity through a sale of its APE units to Antara Capital LP at a weighted average price of 66 cents a share. As a result, AMC reduced its debt standings by approximately $100 million

“Clearly, the existence of APEs has been achieving exactly their intended purposes. They have let AMC raise much-welcomed cash, reduce debt and in so doing deleverage our balance sheet and allow us to explore possible [mergers and acquisition] activity,” CEO Adam Aron said in a news release.

AMC Shares Market Outlook in 2023

The American movie theatre chain has seen its core business rebound from Covid-19 lockdowns in 2022. Moreover, most of the places where AMC operates have seen high levels of Covid vaccine rollout. With over 946 theatres and a better liquidity position, AMC anticipates performing better in 2023 than in 2022.

“Our outlook for the industry is positive as we expect the box office will be larger in 2023 than in 2022. Our liquidity position is strong, as we continue to demonstrate our ability to raise cash, thereby strengthening our balance sheet,” Aron recently noted.

Notably, the company announced that it will be dealing with market headwinds by the acquisition of new theatres while exiting underperforming locations. As such, the company is working to convince investors of better earnings in 2023. Moreover, AMC recently raised $162 million of additional cash through the sale of equity.

According to market data provided by MarketWatch, seven ratings surveyed indicate analysts are bearish on AMC in the near future. Precisely, the seven ratings have AMC shares an average target price of $2.99, and an average recommendation of Underweight.

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Steve Muchoki

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