AMC Entertainment Holdings
stock was going bananas on Thursday as investors braced for the conversion of APE equity units to common stock on Friday. The good news: AMC shares just got an upgrade from analysts at Wedbush.
Those checking in on
AMC
(ticker: AMC) stock Thursday may have gotten a shock. The shares closed at $1.96 on Wednesday and were last at $14.10—what looks like a gain of more than 600%. Not really. In fact, it reflects a decline of more than 10% for the value of the stock, which just went through a 10-for-1 reverse stock split that should have, in theory, put the share price at $19.60.
But investors are, yet again, selling out of the movie-theater chain in anticipation of the conversion of APE equity units to common stock on Friday, an event long in the making that will dilute the company’s shares, and warrants its own detailed explanation. AMC on Wednesday capped its worst three-day stretch for the stock since February 2021 and August was poised to be its worst month on record.
Investors could use some good news. Analysts Alicia Reese and Michael Pachter at Wedbush delivered it, upgrading shares in AMC to Neutral from Underperform with a price target on the stock of $19.
“We think AMC is well-positioned against an improving industry backdrop,” Reese and Pachter wrote in a note Thursday. “Moviegoers are finicky with content these days, but we are seeing that they also increasingly opt for premium screens and a larger basket of high-margin concessions.”
Wedbush expects North American box office to rise 20% from 2022 levels this year, at around 78% of 2019’s pre-Covid-19 levels, with AMC maintaining its 22% market share if not expanding. Not bad, and summer blockbusters are helping.
Those wondering what Wedbush’s expectations mean against the backdrop of the APE conversion and issuance of even more AMC stock as part of a shareholder settlement also can rest easy. That $19 price target reflects the total AMC shares outstanding once this is all over.
Write to Jack Denton at [email protected]
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