AMC Entertainment (NYSE:AMC) managed to avoid a fourth consecutive losing day on Monday. But beleaguered AMC stock is headed back down again today as investors continue to question the company’s foray into precious metals.
AMC stock was down more than 4% in early trading today, dropping to $22 per share. As recently as March 29, it popped at more than $30, but a steady selloff is depleting AMC once again.
The major catalyst for AMC in recent days has been its 22% investment in Hycroft Mining Holding Corporation (NASDAQ:HYMC). The gold and silver mining firm has substantial holdings in Nevada.
But the company acknowledged in November that Hycroft would have to raise cash to meet its financial obligations in the next year. The company also closed its mine in western Nevada, laying off more than half of its workforce. Hycroft said it would instead focus on processing gold and silver sulfide ore.
AMC CEO Adam Aron says his theater chain can help HYMC work through its liquidity challenges, raise capital and work with retail investors. But that could be a challenge in itself.
After all, AMC has been an up-and-down investment ever since it popped last year at the height of the Reddit-fueled meme stock trend. Traders on the r/WallStreetBets subreddit pushed AMC stock from less than $3 in January 2021 to a high of nearly $65 in June.
The push helped AMC get out of debt and reposition itself. But since that jump, AMC stock is down more than 65%. Just in 2022, AMC is down a substantial 20%.
In the fourth quarter, AMC reported a net loss of $134.4 million on revenue of $1.17 billion.
Analyst opinions are mixed — of the 15 who track AMC stock, nine rank it a “buy” or “strong buy” while six rank it a “hold.” But the analysts’ price targets for AMC are an average of $10.45, which indicates an expected drop of more than 53% from current prices.
Proceed with caution when it comes to AMC stock.
On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
