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AMC: Long-Term Movie Slate Adds to Its Comeback Reel
Stock Analysis & Ideas

AMC: Long-Term Movie Slate Adds to Its Comeback Reel

Story Highlights

With a strong movie slate and as people increase discretionary spending, AMC stock is on the rebound. However, the increase in AMC’s outstanding shares has sparked concern among investors regarding stock dilution, but its attractiveness continues to improve.

Movie theater giant, AMC Entertainment (AMC), has investors looking toward its future. The company’s strong movie slate has resulted in a turnaround for the beaten-down firm and is now offering healthy sales growth. The stock has transformed into a potentially attractive investment.

AMC enjoyed huge popularity during the meme stock frenzy of 2021. This label proved beneficial for the company, as retail investors gathered on multiple social media forums and bought into the aging movie theater company.

Over the first six months of 2021, investors boosted AMC’s share price by almost 2,500% before plummeting, as the saga continued. Even then, the stock remains attractive since many investors are holding their shares, hoping for another short squeeze.

Recently, blockbusters are back on big screens, helping AMC recuperate from pandemic-induced lockdowns. Moreover, the revival of hit movies could add to AMC’s potential, making it a valuable long-term investment.

On TipRanks, AMC scores a 1 out of 10 on the Smart Score spectrum. This indicates a high potential for the stock to underperform the broader market.

The Talk Amongst Shareholders

A bullish catalyst for AMC is the return of moviegoers to the theater. Between 2020 and 2021, studios were reluctant to release blockbusters in theaters because the pandemic deemed it almost impossible to gather crowds. However, Hollywood is now back to going all in this season, and AMC has seen a great response from the market.

AMC recently reported that its ticket sales increased by almost 15% last weekend, compared to the same weekend in 2019. That’s a shocker since the latter was pre-pandemic.

AMC’s revenue in the recent quarter rose to $785.7 million, an increase of $148.3 million from the same quarter in 2021.

The company’s recovery offers hope to shareholders. However, investors must wisely compare the business’s growth to its pre-pandemic levels, to properly judge its efficiency.

AMC Commands a Strong Market Share

AMC stock has become a force in the industry by snatching market share from its competitors. The theater company’s serendipitous labeling as a meme stock has resulted in heaps of capital flowing to its shares. This kept it alive, while its competitor, Regal, shut down again in 2020.

The company tried its luck by introducing mobile ordering. This led to a 40% increase in revenue compared to 2019. Remember that this is huge for AMC because most of the revenue from ticket sales goes to a movie studio, but food sales largely stay within AMC.

Wall Street’s Take

Turning to Wall Street, AMC stock maintains a Moderate Sell consensus rating. Out of five total analyst ratings, two Holds, and three Sell ratings were assigned over the past three months.

The average AMC Stock price target is $7.67, implying a 39.03% downside. Analyst price targets range from a low of $1 per share to a high of $16 per share.

The Bottom Line: Is It Worth Investing in AMC?

Despite a dilution in shares from various secondary stock offerings, AMC’s long-term outlook continues to improve with every passing quarter.

Smaller rivals of AMC that struggle with financial resources have come to a halt, and the company is slowly adding its rivals’ assets to its portfolio.

Moreover, as more people buy buttered popcorns, nachos, and drinks, AMC benefits from higher receipts and revenue growth.

There continues to be positive news concerning the movie industry’s reversion, which will help AMC strengthen its position in the stock market.

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