- AMC stock fell 8% on Friday despite equities recovering strongly in the afternoon.
- AMC could see a short-term rally as sentiment looks overly bearish.
- AMC stock not one for a long-term hold.
AMC stock (AMC Entertainment) closed poorly on Friday as it lost over 8%. Despite all the doom and gloom though, the retail favorite still advanced by 1.86% last week. Considering the carnage elsewhere in the market, it was a reassuring performance from AMC.
AMC stock news
As ever, AMC volatility remains high, but at least it is declining. This is not exactly reassuring as there is a strong correlation between volatility spikes and outperformance for AMC. Calmness and this stock do not seem to match.
AMC remains nearly always toward the top of social media stock mentions despite actual newsflow purporting to the stock being low. Attendance numbers for the latest release are seized on by AMC apes, and indeed attendances have been recovering impressively. The latest release, Doctor Strange, is performing strongly. As we have repeatedly mentioned though, AMC faces some serious headwinds. We are aware many of you reading this may have a strong attachment to the stock, but our job is to analyze and try to report without bias. Being emotionally attached to a stock is also inadvisable. The only thing you should be emotionally attached to is money and keeping it.
AMC in our view is not going to help in this regard. Yes, revenues are growing and recovering strongly, but AMC just has too much debt and is really going to struggle to repay it in the years ahead. Its bonds are trading in default territory at 70 cents on the dollar. It owes deferred lease payments. It needs to raise more cash, and its avenues have been reduced in this regard. Investors baulked at yet another dilutive share raising, and now the bond market will not be keen on lending more money to AMC.
AMC needs to still drastically increase its revenue while controlling costs. This is a tall order in the current environment. We forecast that revenues will indeed continue to grow but unfortunately so too will costs. Inflation makes this a certainty.
AMC stock forecast
AMC has tested and failed the resistance at $13, but the retracement is still well above the lows from last week at $9.70. This is the short-term pivot. Above and AMC should have another test of $13 and break above. $21 will then be the extended target, but that would be sounding alarm bells that it is time to get out. The trade down to $9.70 set both the Money Flow Index (MFI) and the Relative Strength Index (RSI) to an oversold level.
AMC stock chart, daily
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