AMC Shares Plunge 14% on a New Equity Distribution Deal

Wedbush upgraded AMC Entertainment (NYSE:AMC) to Outperform from Neutral, lifting its price target to $4 from $3, as improving fundamentals and a clearer financial path forward brighten the outlook for the theater chain. As a result, the stock surged more than 11% today.

The firm cites multiple reasons for the upgrade. First, a steadier flow of movie releases is expected to boost box office performance over the next several quarters. AMC is also poised to capture market share with its premium screen dominance in North America and expansion plans in the UK and EU. On the financial front, the company has either repaid or pushed out all debt that was due in 2026, eliminating a major overhang.

Wedbush also highlighted that AMC is likely done with major share issuances, removing a significant headwind. The company is focusing on closing underperforming locations while reinvesting in its best-performing theaters—those already trending 3% above 2019 revenue per screen levels before additional upgrades.

Capital spending is expected to remain flat in 2025, signaling discipline as AMC enhances its core assets. With improving free cash flow and a normalized box office pipeline, Wedbush believes the company can trade at an 8x EV-to-EBITDA multiple—right in line with historical averages during stable periods.

While growth remains limited and the broader industry still faces structural challenges, AMC’s current positioning and recovery trajectory warrant a more constructive outlook, according to the firm.

Chad Beynon of Macquarie recently adjusted the price target for NYSE:AMC, AMC Entertainment Holdings, to $4, a move that suggests a potential decrease in the stock's value by about 25.65% from its current trading price of approximately $5.38. This adjustment was reported by TheFly in an article titled "AMC Entertainment price target raised to $4 from $3.50 at Macquarie." This new valuation comes at a time when AMC has shown a notable uptick in its stock value, rising over 8% following a tweet from CEO Adam Aron about the company's exceptional performance during the 4th of July week.

AMC Entertainment Holdings has been in the spotlight due to its significant achievements during the 4th of July week, marking one of the best periods in the company's history. This success was largely driven by merchandise sales related to the new "Despicable Me" film, which saw AMC welcome more than four million customers, the highest cinema attendance of the year for the company. The merchandise sales for "Despicable Me 4," a collaboration between Universal Studios and Illumination, were the second highest ever for AMC, showcasing the film's popularity among moviegoers.

The company's CEO, Adam Aron, highlighted that food and beverage sales on July 3rd reached the third-highest for a Wednesday in AMC's 104-year history. This surge in sales, along with the high demand for merchandise such as the "Despicable Me 4: Anti-Villain League" bus tin lunchbox, T-shirts, hoodies, and collectible Funko POP! figure toys, underscores the significant impact of animated films on AMC's performance. Notably, other animated features like Pixar's "Inside Out 2" have also contributed to breaking box office records in recent months.

The remarkable merchandise sales for "Despicable Me 4," ranking second only to those for Taylor Swift's concert movie, highlight the significant role of merchandise sales in AMC's revenue. This popularity of "Despicable Me 4" among moviegoers not only boosts the company's financial performance but also demonstrates the potential for future collaborations with film studios to drive revenue through merchandise sales.

Despite the positive momentum from merchandise and ticket sales, AMC's stock has experienced a slight decrease, now trading at $5.365, with a change of approximately -1.92%. The stock has fluctuated within a wide range over the past 12 months, reaching as high as $51.62 and as low as $2.38, reflecting the volatile nature of the entertainment industry. With a market capitalization of approximately $1.59 billion and a trading volume of about 7.14 million shares, AMC continues to navigate the challenges and opportunities within the cinema sector.

Roth MKM analysts reaffirmed their Sell rating on AMC Entertainment (NYSE:AMC) with a price target of $4 on the stock, noting they remain cautious due to AMC's substantial debt levels, low or negative projected cash flow, and high valuation.

Despite some optimism about the 2025/2026 box office outlook, it may take several years for AMC to improve its financial position and address its significantly diluted share count.

AMC ended the first quarter with $624 million in cash. The analysts' projections include a cash burn of $335 million in the second quarter, followed by positive free cash flow of $155 million in the second half of the year, reducing the need for additional equity raises. Total debt stands at $4.453 billion after a recent $164 million debt-for-equity swap, with an annual interest expense of $346 million. The diluted share count has increased to approximately 325 million, following the completion of an ATM offering and debt swap, which is about 14 times larger than at the start of the pandemic, leaving room within the authorized maximum of 550 million shares.

Roth MKM analysts reaffirmed their Sell rating on AMC Entertainment (NYSE:AMC) with a price target of $4 on the stock, noting they remain cautious due to AMC's substantial debt levels, low or negative projected cash flow, and high valuation.

Despite some optimism about the 2025/2026 box office outlook, it may take several years for AMC to improve its financial position and address its significantly diluted share count.

AMC ended the first quarter with $624 million in cash. The analysts' projections include a cash burn of $335 million in the second quarter, followed by positive free cash flow of $155 million in the second half of the year, reducing the need for additional equity raises. Total debt stands at $4.453 billion after a recent $164 million debt-for-equity swap, with an annual interest expense of $346 million. The diluted share count has increased to approximately 325 million, following the completion of an ATM offering and debt swap, which is about 14 times larger than at the start of the pandemic, leaving room within the authorized maximum of 550 million shares.

AMC Entertainment Holdings (NYSE:AMC) saw its shares drop over 14% on Thursday following its announcement of a new equity distribution deal valued up to $250 million. The company plans to occasionally sell its Class A common stock under this agreement, aiming to raise as much as $250 million.

AMC aims to utilize the raised funds for various purposes, including enhancing its liquidity, reducing or refinancing existing debts, and covering general corporate needs.

The company's liquidity has been negatively impacted by a disappointing box office performance in the first quarter, a situation partly attributed to last year's strikes by the Writers Guild of America and the Screen Actors Guild-American Federation of Television and Radio Artists.

AMC Entertainment Holdings (NYSE:AMC) saw its shares drop over 14% on Thursday following its announcement of a new equity distribution deal valued up to $250 million. The company plans to occasionally sell its Class A common stock under this agreement, aiming to raise as much as $250 million.

AMC aims to utilize the raised funds for various purposes, including enhancing its liquidity, reducing or refinancing existing debts, and covering general corporate needs.

The company's liquidity has been negatively impacted by a disappointing box office performance in the first quarter, a situation partly attributed to last year's strikes by the Writers Guild of America and the Screen Actors Guild-American Federation of Television and Radio Artists.