In the first quarter of 2021 AMC Entertainment Holdings Inc. (NYSE:AMC) has become one of the most popular meme stock investments on the market.
A year later, the movie theater chain’s post-pandemic recovery hasn’t gone as well as investors had hoped, and the company’s latest decision to buy a struggling gold mine instead of repaying more than $5 billion in debt has raised concerns among some analysts that AMC’s management is becoming more and more desperate.
Number: In the fourth quarter, AMC posted another net loss of $134.4 million, with revenue still 19.2% below pre-pandemic 2019 levels. In February, the company announced it was refinancing more than $5 billion of debt it has on its balance sheet.
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Despite the company’s ongoing difficulties, AMC shares are up 583% since the start of 2021. Early last year, AMC narrowly avoided bankruptcy by actively selling shares to stay afloat. AMC shares outstanding have more than quadrupled since the start of October 2020.
After peaking at $72.62 in June 2021, AMC shares are trading back down around $15.
AMC Investments in Mining: AMC took the market by surprise this week when it announced it was acquiring a 22% stake in the gold and silver mining company. Highcroft Mining Holding Corporation (NASDAQ: HYMC) for $27.9 million.
In a press release, AMC CEO Adam Aron was recognized for “leading a company with valuable assets during a period of severe liquidity, capital raising and balance sheet strengthening problems.”
Benzing on Tuesday Pre-sale preparationco-host Dennis Dick said it was “disgusting” to see Aron take charge of AMC’s rising stock price in 2021.
“He didn’t do it — oh yes, he was the one who got AMC up to $70 a share, and it was all thanks to his great management. This is not the case. He was lucky that Reddit and WallStreetBets and obviously everyone else just raised the price of his shares and he was able to sell the shares and put them in his pocket because he sold half of his holdings,” Dick said.
Dick said that Aron and AMC’s decision to use the money they received from AMC’s retail investors to buy the small stock mining company is a sign that the company has no idea what it’s doing at the moment.
Keeping the meme alive: David TrainerThe CEO of New Constructs, said this week that Hycroft is the latest in a series of gimmicks, including offers of free popcorn and repeated updates to accept Memcoins and other cryptocurrencies, to keep the AMC online meme movement going.
“AMC Entertainment’s irresponsible decision to buy a stake in a gold mining company is a misallocation of capital and absolutely meaningless for AMC Entertainment’s business,” Trainer said.
“AMC Entertainment’s reckless decision to acquire a stake in a gold mining company confirms our view that AMC Entertainment stock could fall to zero per share.”
Benzing’s opinion: A certain number of AMC investors will clearly support the stock and management, no matter what happens to the company or its share price. AMC also still has a relatively high percentage of short shares outstanding at 20.8%, according to ORTEX Analytics.
Photo courtesy of AMS.
Latest AMC Ratings
| date of | Firm | Action | From | TO |
|---|---|---|---|---|
| November 2021 | Wedbush | downgrade | Neutral | unsatisfactory |
| Sep 2021 | Macquarie | downgrade | Neutral | unsatisfactory |
| June 2021 | Wedbush | Supports | Neutral |
View other analyst ratings for AMC
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