Barrington Research analyst James Goss put a “market perform” rating on AMC stock, which had been down more than 70% on the year. Shares opened Nov. 14 at $8 each, a market cap of nearly $4 billion.
AMC CEO Adam Aron milked his “meme stock” status to raise capital since early 2021. The company’s cash balance at the end of September was still over $700 million. It started the year at $1.6 billion. The money went into running the business, which had an operating cash flow loss of $600 million for the first three quarters.
But Aron now says he can still buy other theaters as they go under. The bankruptcy of rival Cineworld could be one source of theaters, even as AMC itself closes poor performers.
This year Aron signed a partnership for corporate meetings with Zoom Video Communications (NASDAQ:ZM). It expanded its premium large format (PLF) business and is now the largest operator of IMAX (NASDAQ:IMAX) theaters. The company has its own credit card and even owns a gold mine.
All this is backed by relentless promotion and stock sales, including preferred shares known as APE (NYSE:APE), named for the small traders who boosted the stock last year. APE also rose during the weekend, opening Nov. 14 near $1.75.
The hype is meant to get AMC stock past the pandemic and into something resembling normalcy. Revenue for the third quarter was $968 million, up from $763 million in 2021. But net losses rose to $227 million, or 22 cents per share. Back in 2018, AMC was a profitable business.
What Happens Now for AMC Stock?
Aron is like one of those old-style vaudeville entertainers who kept dancing until a hook dragged him away. Not that there’s anything wrong with that.
Without AMC Theaters, the movie business loses a big chunk of its business model. It is literally the last popcorn stand. Movie theater chains created Hollywood, and now Hollywood desperately needs AMC to survive.
On the date of publication, Dana Blankenhorn did not hold (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.