AMC Entertainment Stock News and Forecast: Shock and awe or Love and Thunder as Thor to the rescue

AMC stock failed to capitalize on a recovery in US equities after another supercharged CPI report. Equity indices had been indicating down nearly 2% based on the futures markets just before the open but recovered sharply as investors took bad news as good news and bet on a quicker than expected interest rate hiking cycle followed by an imminent US recession and rate cuts. Quite how this is taken to be good news is beyond me, but the market exists to frustrate us most of the time, and it is once again living up to that Walter Deemer adage. 

AMC Stock News: Thor: Love and Thunder 

AMC has been having a good summer in terms of box office numbers and stock performance. AMC stock is up 33% over the past month as summer blockbusters keep breaking box office records. We have had Tom Cruise and the back-to-the-80's gem Top Gun: Maverick, followed by back to the 90s with Jurassic World Dominion, Minions, and now Thor: Love and Thunder. We believe it was the highest opening ever for the Thor line of films with sales topping $140 million.

AMC is seeing a strong summer of attendances with pre-pandemic 2019 attendances being surpassed regularly. Pent-up demand is certainly at play here. All that should at least make some nice copy for CEO Adam Aron when AMC announces earnings on August 4. The CEO recently tweeted to try and reassure his AMC Apes that a "short pounce" would soon be in the cards.

This implies in our view that he is bullish on Q2 earnings, and AMC stock did pop about 15% after that tweet. Adam Aron has regularly been playing to the crowd and interacting with his newfound retail followers. We feel this is not a good look for CEOs but is becoming commonplace. CEOs are after all salesmen. As a former Wall Street moron, I know the Kool-aid doled out by CEOs at investor presentations. I have yet to meet one who does not engage in talking up their stock and company. Usually, this is in institutional formats and language, so it is deemed more acceptable. Here CEO Adam Aron has identified that his shareholder base is now retail and has merely adapted his sales pitch accordingly, but it is to be ignored in my view. 

AMC Stock Forecast: More money comes in, but more money goes out

Revenues are rising, so that should mean more profits, right? Wrong! AMC is forecast to remain loss-making with EPS forecast to come in at $-0.20. This is a narrowing from the prior quarter, but cash flow is shrinking and cash is being burnt. Yes, AMC built up a strong cash pile, but a few more quarterly losses will see to that. AMC is going to struggle with rising interest rates and an imminent recession. The company just avoided bankruptcy during the pandemic, but it may just have delayed that occurrence. It now has more debt than it did pre-pandemic. 

We can at least take some credit for actually being bullish on this one in the short term recently. Yes, I am bearish longer term, but AMC had been forming a bottom, and the triangle breakout has now occurred. We had identified $22 as the breakout target, so this may still develop. Key support is the breakout level at $14. AMC needs to hold that to remain on target for $22.

AMC chart, daily