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AMC Entertainment Holdings’
share worth ignores the corporate’s substantial debt obligations and large inventory gross sales over the previous few months, in accordance with MKM Companions.
The analysts lower their score to Promote from Impartial, setting a worth goal of $1 for AMC (ticker: AMC) regardless of its massive bounce over the past week.
Shares of AMC gained 13% on Monday however later within the morning a number of the steam began popping out of the commerce, and the inventory was up 10%, to about $14.60. Shares have gained 126% up to now 12 months in contrast with 15.7% return for the S&P 500 Inventory index. AMC inventory is up 588% to this point this 12 months.
MKM’s Eric Handler stated in a be aware on Monday that the inventory worth has diverged from the corporate’s valuation.
AMC has raised $1.2 billion in capital since mid-December, filling its coffers with cash to stave off a bankruptcy. However stockholders have seen almost 75% dilution, and AMC nonetheless has $5.7 billion in debt to pay.
The most important U.S. theater chain operator took $600 million of debt off its books final week when personal fairness investor Silver Lake converted its bond to stock, after which bought that inventory.
However AMC has been deferring debt curiosity funds, Handler famous. It additionally has $480 million in deferred rents that can come due some day, presumably quickly. It has bought hundreds of thousands of shares of inventory, elevating its excellent shares to 440 million, greater than 4 instances the typical share depend on the finish of the third quarter.
The corporate has been caught up within the buying and selling mania stoked by retail traders goading one another on a Reddit chat discussion board to bid up shares of
(EXPR), AMC and others.
It’s a David-and-Goliath story pitting these retail investors against Wall Street hedge funds, a few of which have closed out their bets in opposition to GameStop.
These shares have one factor in frequent: That they had fallen out of favor. A number of the targets are retailers which have been topic to enterprise interruption attributable to the pandemic.
AMC is ready to function in some areas, however not its key areas in New York Metropolis and Los Angeles, and the place it could actually function it faces occupancy restrictions.
Movie show operators usually have suffered over the past 12 months due to these enterprise interruptions. Home field workplace gross sales totalled $2.1 billion in 2020, however that’s down 82% from 2019.
Final week, Goldman analysts stated AMC had raised sufficient capital to outlive via the center of 2021 even when the field workplace doesn’t get better by then.
MKM’s Handler stated, “The emotion behind the #SaveAMC motion might carry the shares greater within the near-term, however we consider this valuation-be-damned momentum will not be sustainable over the long run.”
Write to Liz Moyer at Liz.Moyer@barrons.com