AMC Entertainment Stock Forecast: AMC tumbles nearly 16% after new dilution event

• AMC Entertainment tumbles after disclosing plan to sell $250 million worth of stock.
• Cash would be used to pay down existing debt load.
• Kung Fu Panda 4 and Dune: Part 2 are doing well at the box office.
• Support from February awaits AMC stock at $3.60.

AMC Entertainment (AMC) stock is back on the dilution train. The heavily indebted cinema chain and once-loved meme stock is heading to the market to sell another $250 million worth of shares in order to pay down its strangling debt load obtained during the heights of the covid pandemic.

AMC stock slipped 15.8% lower to $3.65 per share at the time of writing on Thursday afternoon. The broader market has drifted slightly higher on the last day of the trading week with the S&P 500, Dow Jones and NASDAQ Composite all seeing light gains.

AMC Entertainment stock news

AMC had total debt of $9.1 billion at the end of the fourth calendar quarter of 2023 but $3.7 billion in the more significant net debt ratio once cash on the balance sheet and investments were accounted for. Toward the end of the pandemic, AMC had acquired 

"[W]e believe that volatility and our current market prices also reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals,” wrote AMC officials in a statement, “and we do not know how long these dynamics will last.”

Besides its worrisome debt obligations, uncertainty exists surrounding the company’s industry. Since the pandemic, crowds have not returned to movie theaters in the same way they did prior to the pandemic.

Two bright spots have been Kung Fu Panda 4 and Dune: Part 2. The former took in $108 million domestically in its first two weeks at the box office in March. The Frank Herbert sci-fi sequel garnered $81.5 million in the US and Canada during its weekend debut.

AMC awaits a May 2 court hearing where a judge will consider whether to finally approve the proposed $3.3 million settlement from hedge fund Antara Capital. The hedge fund originally faced a $20 million lawsuit from AMC shareholders for its profiting off a “short-swing” episode involving APE equity units.

AMC Entertainment stock forecast

After the current sell-off, bulls have little to look forward to. AMC is in no position to drastically reduce its debt and move to a growth phase. In that sense, there just aren’t any good fundamentals that could support an uptrend.

On the technical front, there is also no respite in sight for AMC other than the $3.60 support from early February. 

AMC stock is trending beneath the 20-day and 50-day Simple Moving Averages (SMA), which have just entered a bearish crossover. The Awesome Oscillator is bearish, and the Relative Strength Index (RSI) offers faltering momentum. 

AMC daily stock chart