AMC Entertainment Stock News and Forecast: Is it time to give up?

AMC stock (AMC Entertainment) is trying to recover ground on Tuesday as equity markets gather themselves ahead of Fed Chair Powell's speech later on Tuesday. Prior to that, we get US retail sales, which will show how the consumer is reacting to raging inflation. Given that the jobs market is hot right now, we feel retail sales should hold up and that could ignite a mini bear market rally. The sentiment is about as bearish as can be, and that often leads to strong counter-trend rallies. 

AMC Stock News

AMC posted pretty weak earnings for the last quarter. AMC is in a tough spot. It has too much debt: way, way too much debt. This is not the time for that with rising interest rates. AMC's debt is flashing default warnings. Its June 2026 bond is trading at 69 cents on the dollar. In January it was trading at par (100). Generally, this is a strong sign that investors are not confident in repayment. The bond is yielding a whopping 21.6%. That is the risk-reward required to entice buyers of that bond. In 2026, AMC has loans of just under $1.7 billion that will need repaying. Where is that cash going to come from?

You want to refinance the debt at 21%?  Good luck with that. Maybe you can persuade some of those AMC apes to take yet another share dilution and issue stock. Again, good luck with that. They finally copped on and rejected the last proposed share dilution. "That is three years away," I hear you say. Yes, but with a recession now looking odds on, it is unlikely AMC is going to improve its cash position between now and then. In fact, the company is still losing plenty of money and has over $500 million in refinancing costs due next year. Uh oh!

At the latest earnings presentation, CEO Adam Aron was notably bullish. He highlighted advancements into NFTs and crypto. Great timing there! Everyone always points out how much cash AMC has managed to raise and how much it has on the balance sheet. Over $1 billion, I hear you say.

From the AMC CFO at the most recent earnings call last week: "Operating cash burn representing cash burn before debt servicing costs and before deferred rent payback was $223.9 million, and this compares to $321.6 million in Q1 of 2021. Looking ahead, we expect our cash burn to improve sequentially through the year, with Q2 being better than Q1, but still relatively weak."

Burning $223 million per quarter before servicing debt and paying rent! Are you kidding me? That gives it barely a year. To give some credit, AMC just got its $950 million in 7.5% notes out the door before the credit market tightened. Given we just outlined where the 2026 bond is yielding, it was perfect timing. AMC owes $272 million in deferred rent. Given the pressure on all sectors of the economy, that is likely to not be deferred for too much longer. 

The CFO also commented on the investment in Hycroft Mining (HYMC): "We recorded a mark-to-market gain of $63.9 million in the first quarter of 2022. This is based on the share price of Hycroft on March 31." Since March 31, HYMC stock has nearly halved from $2.30 to $1.34.

AMC Bond 2026 Yield-Refinitiv

AMC Stock Forecast

No point in even considering an investment in this one, but for short-term trading it can work or break you. It is highly volatile and should outperform in any market rally and consequently underperform on the way down. Just bear that in mind. 

AMC stock chart, daily

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