AMC Shares Plunge 14% on a New Equity Distribution Deal

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.

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, Inc. (NYSE:AMC) shares closed almost 5% higher on Tuesday following the company’s pre-announced Q4 results, with revenue of $1.172 billion (vs. Street’s $1.089 billion) and EPS of ($0.30) at the mid-point (vs. Street’s ($0.24)).

Analysts at Wedbush provided their views on the company following the announcement, noting that they remain optimistic about the exhibition industry as attendance just began to meaningfully rebound in Q4/21, and they anticipate attendance to meaningfully improve throughout this year.

The analysts believe the company and its competitors will continue to consolidate while pushing deeper into alternative content to drive attendance, and add premium large format screens and more dynamic ticket pricing in order to drive average ticket higher overall as the film slate shifts toward more blockbuster content.

The analysts adjust their full 2021-year revenue estimate to $2.53 billion from $2.57 billion, adjusted EBITDA to ($302) million from ($359) million, and EPS to ($2.86) from ($2.76).

AMC Entertainment Holdings, Inc. (NYSE:AMC) shares closed almost 5% higher on Tuesday following the company’s pre-announced Q4 results, with revenue of $1.172 billion (vs. Street’s $1.089 billion) and EPS of ($0.30) at the mid-point (vs. Street’s ($0.24)).

Analysts at Wedbush provided their views on the company following the announcement, noting that they remain optimistic about the exhibition industry as attendance just began to meaningfully rebound in Q4/21, and they anticipate attendance to meaningfully improve throughout this year.

The analysts believe the company and its competitors will continue to consolidate while pushing deeper into alternative content to drive attendance, and add premium large format screens and more dynamic ticket pricing in order to drive average ticket higher overall as the film slate shifts toward more blockbuster content.

The analysts adjust their full 2021-year revenue estimate to $2.53 billion from $2.57 billion, adjusted EBITDA to ($302) million from ($359) million, and EPS to ($2.86) from ($2.76).