Proactive Investors - AMC Entertainment Holdings Inc (NYSE:AMC) must raise more capital in the coming months, and the so-called ‘meme stock’ is expected to stay volatile, that’s according to analysts at Wedbush.
The cinema operator has managed to repay around $1 billion debt since 2022, but it still has $4.4 billion outstanding and the next maturities come due in 2026, analyst Alicia Reese has highlighted.
Its debt pile undermines the premise for AMC’s growth, Wedbush reckons, as phases of share price appreciation will likely be watered down by new share sales to raise funds to repay more debt.
“The company’s heavy debt load and lack of dividends overshadow these positive factors, but AMC is focused on alleviating its debt … AMC continues to raise cash from equity sales and must raise more capital in the coming months. [It] must cover its interest payments and conserve cash while it posts losses,” Reese said in a note.
“We expect shares of AMC to continue to be volatile as its shareholders may continue to boost the share price, only to see it fall again after AMC issues shares.”
The analyst does, however, see AMC capturing larger market share and potentially growing revenues in Europe.
Commenting, meanwhile, on broader trends in the industry she highlighted that year-on-year comparatives will be challenging, and, some recent ‘primary titles’ had faltered at the box office.
Though, Reese notes that by the fourth quarter the metrics could be more forgiving.
“We expect the summer box office to rebound notably from the year’s first half, albeit against difficult comparisons until September,” she said.
Reese added: “momentum grows with a solid slate and robust release volume in 2025.
“Our model does not yet include alternative content, such as concert movies in 2024 or 2025.
“AMC hosted Billie Eilish’s album listening party; we do not expect that to move the needle in Q2.
“We expect AMC to show and distribute more of these events in 2024 and beyond, potentially lifting its results materially from our current estimates.”
Wedbush has a ‘neutral’ rating for AMC, with a $3.50 price target (current price: $4.68).