AMC Entertainment Holdings (AMC), one of the most discussed meme stocks in recent history, secured $325.5 million in an at-the-market equity offering in hopes of keeping the company alive.
The cinema chain and entertainment company has been on a tumultuous journey over the past few years. After getting the meme boost and seeing highs of $376/share in 2021, the company now sits at just $8.44/share. It’s lost more than 91% of its value in the last year alone.
But, raising this equity capital through 40 million shares is a good step in the right direction to keep the company afloat. CEO Adam Aron says that this cash won’t just help the company survive, but thrive.
He says that the industry as a whole is in a recovery phase riddled with uncertainty. But, having this surplus of cash offers the company flexibility to navigate the path forward with confidence.
Aron has discussed the company’s liquidity problems for a while now. However, he says those concerns are a nonissue moving forward. The fear of complete financial collapse and bankruptcy is no longer on the table.
Just a few weeks ago, the company underwent a 1-for-10 reverse stock split, and it also converted AMC Preferred Equity units to common stock in August.
While this wasn’t necessarily great news for investors, Aron says that he felt the very same pain himself after watching his 8 million shares turn into 800,000. But it was necessary as the company works toward long-term goals of “thriving” in an industry that many say is on its way out the door.
This news initially sent shares 11% higher in Thursday’s pre-market trading session, but they settled around 3% after the market officially opened. This comes after a solid Wednesday trading session for AMC, in which it posted an 8% gain.
That being said, is this cash infusion simply delaying the inevitable for AMC – or is there reason to believe this could be the catalyst the company needed to regain its footing and become a lucrative stock once more?
We’ve taken a look at AMC through the VectorVest stock analysis software to tune out the noise and focus on what matters most to investors. And, we’ve uncovered 3 things you need to see.
AMC Still Has Poor Upside Potential, Poor Safety, and Very Poor Timing
The VectorVest system simplifies your trading strategy by giving you all the insights you need to make clear, calculated investment decisions in 3 simple ratings.
These are relative value (RV), relative safety (RS), and relative timing (RT). Each rating sits on a scale of 0.00-2.00 with 1.00 being the average. This allows for quick and easy interpretation.
But, it gets better - because the system issues a clear buy, sell, or hold recommendation for any given stock, at any given time, eliminating all guesswork and emotion from your trading strategy. As for AMC, here’s what you need to know…
- Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out) to AAA corporate bond rates and risk. And right now, the stock has a poor RV rating of 0.66. Moreover, the stock is overvalued at today’s price with a current value of just $3.55.
- Poor Safety: The RS rating is an indicator of risk and comes from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity. As for AMC, the RS rating of 0.64 is considered poor as well.
- Very Poor Timing: Despite turning things around over the last week, AMC has been on a downward spiral for years now. The RT rating of 0.03 is about as poor as it gets. It’s based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
With a poor overall VST rating of 0.51, is it time to cut losses on AMC for good and move on? Or, is the cash infusion enough to justify holding on and seeing what the future holds for this stock?
A clear answer is just a click away through a free stock analysis at VectorVest. Trust us - you’re not going to want to miss this one!
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VectorVest advocates buying safe, undervalued stocks, rising in price. Despite securing a whopping $325.5 million in equity funding, AMC still has poor upside potential, poor safety, and very poor timing.
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