AMC Entertainment Holdings (
AMC) is experiencing significant market fluctuations as investors prepare for the conversion of APE equity units to common stock on Friday. Despite this uncertainty, there is some positive news for AMC shareholders. Analysts at Wedbush have recently upgraded AMC shares, providing a boost in confidence for investors.
Early on Thursday, AMC stock shocked investors as it closed at $1.96 on Wednesday and was projected to open around $17.50 based on premarket trading. At first glance, it appeared to be an impressive gain of approximately 800%. However, this surge actually represents a decline of about 10% in the stock's value due to a recent 10-for-1 reverse stock split. In theory, the split should have put the share price at $19.60.
In light of the impending conversion of APE equity units to common stock on Friday, investors are once again selling their positions in the movie-theater chain. This event has been long-awaited and will lead to a dilution of AMC's shares. As a result, AMC recently experienced its worst three-day period for the stock since February 2021, and August is set to be its worst month on record.
A Glimmer of Hope
Amidst this market volatility, analysts Alicia Reese and Michael Pachter from Wedbush have delivered some much-needed good news. They have upgraded AMC shares to Neutral from Underperform and set a price target of $19 for the stock.
According to Reese and Pachter, "We believe AMC is well-positioned to capitalize on the improving industry environment. While modern consumers are selective with their entertainment preferences, we are observing an increasing demand for premium screens and a wider selection of high-margin concessions."
Wedbush also predicts a 20% rise in the North American box office for this year compared to 2022 levels. They expect AMC to maintain its 22% market share in the industry, if not expand it. Furthermore, the release of summer blockbusters is expected to drive this growth.
For those concerned about Wedbush's expectations amidst the APE conversion and the issuance of additional AMC stock as part of a shareholder settlement, there's some reassurance. The $19 price target reflects the total number of AMC shares outstanding after these events conclude.
Overall, while AMC continues to face challenges, the positive outlook from Wedbush suggests that there are potential opportunities for growth and recovery in the near future.