Will AMC Stock Rebound in the Long Term?

Key Takeaways

• AMC showed signs of growth in 2024 after Roaring Kitty made a comeback to social media.
• AMC's financial fundamentals show slow signs of growth but still face multiple challenges.
• This meme stock is pointed more toward sentimental investors who should be cautious.

Introduction

For any of you who were part of this extraordinary event, you would remember the exhilaration, excitement, and feeling that Wall Street was taking a hard hit vs Main Street for once. However, all good things ultimately end, but does this not mean there's hope for an AMC resurgence, and will AMC stock rebound in the long term?

AMC was part of the 2021 meme stock phenomenon, where it hovered around $9.32 in 2020 and surged to over $260 in 2021, garnering a lavish return of over 2,705.15%! In this article, I will go through AMC's key indicators and uncover whether there is potential hope of a reignition among investors to see an AMC rebound.

Return of Roaring Kitty

Keith Gill, famously known as the “Roaring Kitty,” was the centrepiece of the AMC meme stock craze back in early 2021, an individual who simply "just liked the stock" and amassed a large following of like-minded retail investors who followed his support for the AMC company.

Back in May of 2024, Keith made a return to social media, reigniting interest in meme stocks, including AMC. As a result, AMC shares jumped by 78% before dropping back down to pre-social post levels. This unfortunately indicates less support and hype in the stock vs its 2021 days.

Perhaps if Keith Gill makes a grand return and gains the attention of other influential investors and figures, AMC's stock may rebound again and see strong returns similar to those during its famous stock surge.

Financial analysis of AMC

Analysing AMC's Technical Indicators

Although we are not seeing huge price jumps, we can certainly still see investor interest. For example, on Nov 25th 2024, AMC's stock jumped by 6.15% during pre-market trading. This is a reflection of positive investor sentiment toward the stock, possibly driven by the company's recent releases of 'Wicked' and 'Gladiator II'.

Price Trends and Moving Averages

AMC's price is currently below its 20-day ($4.32), 50-day ($4.43), and 200-day ($4.45) simple moving averages, signalling a bearish market trend. The Relative Strength Index (RSI) is at 37.42, indicating oversold conditions but not yet signalling a reversal, and with a MACD value of -0.16 further supports bearish momentum.

Support and Resistance Levels

Key Fibonacci levels suggest immediate support at $3.91 and resistance at $4.31. Breaking below $3.91 could lead to further declines while surpassing $4.31 might indicate a potential recovery and a new bullish stock rebound.

Volume and Volatility

Recent trading volumes have been moderate, with no significant spikes to suggest strong investor buying sentiment, and the Average True Range (ATR) of 0.21 indicates relatively low volatility.

Sentiment and News Impact

AMC faced challenges in 2024, including a 34% stock decline despite strong attendance figures across its chain. The broader meme stock trend has waned, and AMC's fundamentals remain under pressure, with limited catalysts for a near-term stock reversal.

AMC key financial performance overview of 2024

• AMC's revenue growth in Q3 of 2024 was a 31% increase from its Q2 2024 earnings. Leading to improved financial health.
• AMC's profitability also showed signs of improvement, as its net losses were 37% less than in Q2 along with an adjusted EBITDA that was four times stronger in the same time period, making AMC's Q3 performance the second-best in its history.
• In regard to AMC's debt management, they reduced their debt by $165 million in Q3 of 2024, bringing their total debt reduction down by $349 million for 2024.
• Finally, AMC's cash position ended with the company having $527 million, which can provide the company with leeway for its ongoing operations and potential investments.

Valuation analysis of AMC

In order for us to determine the future of AMC's stock, we must consider where its current stock sits in relation to its financials. Currently, AMC is trading at around $4.02, with a market cap of $1.51 billion and an enterprise value (EV) of $9.44 billion.

AMC's EV/EBITDA ratio is much higher than the overall industry average. This indicates an overvaluation relative to its earnings. AMC's P/S is rather low, indicating signs of low investor confidence. The company's negative P/B highlights AMC's financial distress.

Will AMC stock go up again?

This is a difficult question to answer. If I knew with certainty, I'd certainly be positioning myself ready to take full advantage of the market. However, I, like you, can only go off an interpretation of the market and AMC's financial health.

From a financial standpoint, AMC is showing strong but slow signs of growth with improvements in its revenue and adjusted EBITDA. These are good indicators that may translate to the market and drive bulls to push AMC's stock into a rebound.

Despite these positive indications, AMC still faces multiple challenges, particularly with its debt. The company has been very proactive in managing its financial obligations and succeeded in raising capital through equity sales, but it's still early days to see whether AMC's stock can recover.

Should I buy AMC?

Based on the above analysis of AMC, I would certainly be cautious and ensure I have taken the necessary steps to mitigate the risk level. However, AMC remains a popular meme stock largely influenced by social media trends and large volumes of retail investor sentiment.

Due to this, AMC's stock may rebound dramatically if a social buzzstorm begins to break out. As an investor of AMC stock, you will want to constantly monitor social trends and news sentiment toward this stock. A great way to do this is by using our News Sentiment feature, allowing you to stay up-to-date on any stock's live news updates with just one click.