Will AMC Stock Rebound in the Long Term?

AMC Entertainment Holdings, Inc.(AMC), known widely for its AMC Theatres, has been a topic of hot discussion among investors, especially following the unprecedented market activity during the 2021 meme stock phenomenon. It has experienced a significant surge recently, soaring 121% in 24 Hours. The question on many investors' minds is whether AMC stock is a viable long-term investment. This article delves into the factors that could influence AMC's stock price in the future, considering industry trends, the company's financial health, and broader economic indicators.

Intellectia's AI on "Will AMC go up in the long term"

AMC's Recent Rally: A Box Office Hit on Wall Street

Shares in AMC Theatres experienced an impressive 80 percent surge on Monday, sparked by the return of meme stock icon Roaring Kitty to the online scene. AMC Entertainment Holdings, headed by CEO Adam Aron, saw its stock close up $2.28 for the day, finishing at $5.19. This marked a significant recovery, considering AMC's shares had previously plummeted during the pandemic. The cinema giant had capitalized on the meme stock frenzy to raise vital funds needed to maintain operations. Let's dive into the key reasons for AMC's stock surge.

Return of Roaring Kitty

Keith Gill, also known as "Roaring Kitty," who was central to the 2021 meme stock craze, made a return to social media. His posts reignited interest in meme stocks, including AMC.

Gill's return led to a massive increase in trading activity and stock prices for meme stocks like GameStop and AMC. AMC shares jumped 78% following his posts.

Positive Market Reaction

AMC's stock saw a significant rise in trading volume and price. On May 13, 2024, AMC stock jumped 41% in morning trading and reached as high as 66% by the afternoon, hitting a two-month high.

The surge was partly driven by the broader rally in meme stocks, with GameStop also experiencing a substantial increase.

Will AMC stock rebound? Analysing Technical Indicators

AMC stock has shown a notable rebound recently, with a 6.81% gain during regular trading on November 25, followed by a 6.15% increase in post-market trading. This movement reflects positive sentiment, likely driven by strong box office performance during the pre-Thanksgiving weekend, where AMC achieved record domestic revenue, supported by blockbuster releases like "Wicked" and "Gladiator II". However, the stock remains under pressure due to fundamental challenges, including high debt levels and dilution risks.

Technical Analysis of AMC Stock

Price Trends and Volume:

AMC closed at $4.86 on November 25, with a high of $4.95 and a significant trading volume of 31.66 million shares, well above its recent daily averages. This indicates strong buying interest.

The stock has been trading in a range of $4.30 to $5.00 over the past month, showing resistance near $5.00 and support around $4.30.

Key Indicators:

RSI (14): At 64.35, the RSI suggests the stock is approaching overbought territory but still has room for upward momentum.

MACD: The MACD is slightly positive at 0.05, indicating a potential bullish trend.

Bollinger Bands: AMC is trading near the upper Bollinger Band ($4.86), which could signal short-term resistance.

Support and Resistance Levels:

Support: $4.31 (Fibonacci S1).

Resistance: $5.00 (Fibonacci R2), with a breakout above this level potentially leading to $5.27 (Fibonacci R3).

Projection:

If AMC sustains its momentum, it could test the $5.00 resistance level. A breakout above $5.00 may target $5.27 in the short term. Conversely, failure to hold above $4.50 could see the stock retest at $4.30.

Intellectia AI's Charting of AMC Stock

Recent Financial Performance of AMC Stock

Financial Performance Overview (2024)

Revenue Growth:

Q3 2024 revenue reached $1.35 billion, a 31% increase from Q2 2024 and a significant improvement compared to earlier quarters.

Revenue per patron rose to $20.72, up 37.1% from pre-pandemic 2019 levels and 8% higher than Q3 2023, reflecting strong pricing power and customer spending.

Profitability:

Net loss narrowed to $20.7 million in Q3 2024, a 37% improvement from Q2 2024.

Adjusted EBITDA was four times stronger than Q2 2024, marking the second-best Q3 in AMC's history.

Gross margin remained stable at 59.08%, indicating consistent cost management.

Debt Management:

AMC reduced its debt by $165 million in Q3 2024, bringing the total debt reduction for 2024 to $349 million.

Long-term debt maturities were extended from 2026 to 2029 and 2030, improving financial flexibility.

Cash Position:

AMC ended Q3 2024 with $527 million in cash, providing a cushion for ongoing operations and investments.

AMC also managed to reduce its net loss compared to previous quarters, which provided some optimism among investors.

The recent surge in AMC's stock can be attributed to the return of Roaring Kitty, which reignited interest in meme stocks, positive technical indicators, and better-than-expected financial performance in the first quarter of 2024. These factors combined to create a significant upward momentum for AMC's stock.

AMC Stock Forecast?

Key Points:

Short-Term Gains: Incremental increases are expected in the near term.

Long-Term Growth: Forecasts suggest significant growth, with the stock potentially reaching $30.82 by 2033.

Challenges: Debt management and competition from streaming services remain key concerns.

As of November 25, 2024, AMC Entertainment Holdings Inc. (AMC) stock closed at $4.86, reflecting a 6.81% increase from the previous close. Short-term projections suggest mixed outcomes, with MarketBeat forecasting an average 12-month price target of $5.44 (ranging from $3.20 to $10.00) and StockAnalysis estimating targets between $3.20 and $6.00.

Long-term forecasts remain cautious, with sources like Long Forecast predicting a gradual rise to $8.34 by November 2028. Recent developments, including AMC's record-breaking domestic revenue during the pre-Thanksgiving weekend, have contributed to its recent stock price gains. While modest growth is expected, investors should consider AMC's inherent volatility and mixed analyst projections before making investment decisions.

By the end of 2024, AMC's stock price is expected to soar to $9.70, marking an 85% increase from its current price. The upward trajectory is anticipated to continue, reaching $12.51 by the end of 2025, $15.99 by the end of 2026, and an impressive $30.82 by 2033.

Is AMC stock going to go up?

Several factors are influencing this long-term growth. Financially, AMC has demonstrated improvements in revenue and adjusted EBITDA, with Q4 2023 results showing a significant reduction in losses to 54 cents per share from the previous year's $1.40 per share. Market sentiment is also shifting positively, particularly with the resurgence of influential figures like Roaring Kitty, which has injected renewed optimism into AMC's prospects.

Despite these positive indicators, AMC still faces challenges, particularly with its debt. The company has been proactive in managing its financial obligations and has raised capital through equity sales. While this has led to some dilution, it has also provided the liquidity necessary to stabilize its operations.

Analysts opinions on AMC are mixed, reflecting the complex interplay of factors affecting its future. Some analysts are bullish, citing potential market share gains and new content releases as catalysts for growth. Others remain cautious, pointing to AMC's substantial debt and the competitive pressures from streaming services. The average one-year price target for AMC hovers around $9, with more optimistic forecasts going up to $12, illustrating the varied perspectives on the company's financial health and market position.

Is AMC Stock a Good Buy?

Whether AMC stock is a good buy depends on your risk tolerance and investment strategy. AMC remains a quintessential meme stock, heavily influenced by social media trends and retail investor sentiment, often overriding fundamental financial indicators. Analyst views on AMC are split: some caution against its significant debt and potential share dilution, while others commend recent equity offerings for bolstering long-term stability. The stock's high volatility, with a beta of 1.9, signals the potential for dramatic price fluctuations. Investors need to consider these factors, balancing the excitement of quick gains against the risks of volatility and financial challenges.