Quiver Quantitative - AMC stock (AMC) witnessed drastic fluctuations on Thursday, as market participants geared up for the imminent conversion of APE equity units into common shares, set to occur on Friday. Despite the frenetic stock movements, AMC was thrown a lifeline in the form of an upgrade from Wedbush analysts. To those monitoring AMC's stock, the leap from a closing price of $1.96 on Wednesday to $14.10 on Thursday might appear as an over 600% ascent. However, this is not the case. The realignment is attributed to a 10-for-1 reverse stock split, which, theoretically, should have positioned the stock at $19.60. The present lower value underscores a descent of more than 10% in stock valuation.
Market participants are liquidating their holdings in the cinema chain, preparing for the conversion of the APE equity units into common shares – a long-anticipated move that would dilute AMC's stock count. This recent activity concludes a challenging phase for AMC, marking its lowest three-day stock performance since February 2021, with August set to become its most challenging month historically.
However, not all news was grim for investors. Wedbush analysts, Alicia Reese and Michael Pachter, provided a beacon of optimism, elevating AMC's rating from "Underperform" to "Neutral." They have also set an ambitious price target of $19 on the stock. The duo commented on AMC's strong positioning against the evolving cinema landscape. They noted, "While movie enthusiasts are becoming increasingly selective about content, there's a notable trend towards premium screens and a preference for high-margin concessions."
The resurgence in the North American box office is projected to be fruitful for AMC. According to Wedbush, it is anticipated to surge by 20% compared to 2022 figures, achieving approximately 78% of the levels seen in 2019, before the COVID-19 pandemic disrupted normalcy. AMC's stronghold in the market, with a 22% share, is expected to remain steady or even expand. Summer blockbuster releases are contributing positively to this outlook. For those puzzled by the interplay between Wedbush's optimistic forecast and the broader implications of the APE conversion and additional AMC stock issuance, clarity is provided by the $19 price target, which accounts for the cumulative AMC shares in circulation post these events.
This article was originally published on Quiver Quantitative