When it comes to the AMC stock price prediction, retail trades are polarized. One half fully anticipates the Mother of All Short Squeezes or MOASS. Meanwhile, the other half expects AMC Entertainment Holdings (NYSE: AMC) to continue falling after its latest reverse stock split.
The movie-theater company and meme-stock’s 1-for-10 reverse split of common stock and AMC Preferred Equity (APE) unit stock conversion have taken center stage recently. The ultimate result thus far has been an implosion in AMC stock price as the market encounters heavy selling pressure.
The move comes amid volatility in the movie industry. Recent news from Warner Bros. Discovery (NASDAQ: WBD) cut its full-year earnings guidance for 2023 to $500 million. This resulted from the continued strike by actors and writers stopping the production of most shows and movies. The company previously updated investors that it anticipates the strike will be over sometime this month but can’t predict that outcome definitively. It is also assumed the impact will continue throughout this year.
Recent AMC Stock News
This has led to movie theatre companies like AMC getting creative. At the end of August, the company announced that the Taylor Swift | The Eras Tour concert will be in “thousands” of movie theatres in the US, Canada, and Mexico.
In an August update, AMC said, “This marks the inaugural step of a new line of business for AMC Entertainment. In addition to exhibiting TAYLOR SWIFT | THE ERAS TOUR concert film at its own theatres, AMC is also acting as the theatrical distributor, securing locations and screens with numerous other movie theatre operators throughout the U.S., Canada, and Mexico.”
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Unfortunately, this AMC stock news failed to keep the interest of meme stock bulls after some more recent updates on plans to raise more money. On September 6, 2023, AMC Entertainment entered into an equity distribution agreement with Citigroup Global Markets Inc., Barclays Capital Inc., B. Riley Securities, Inc., and Goldman Sachs & Co. LLC as sales agents. The plan is to sell “up to” 40,000,000 shares of Class A common stock of AMC.
The September 6th 8-K filing also states that the company intends to use the net proceeds, if any, to “bolster liquidity, to repay, refinance, redeem or repurchase its existing indebtedness, and for general corporate purposes.”
Impact Of Writers Guild of America Strike
The Writers Guild of America represents more than 11,000 writers working on movies and shows for some of the nation’s top studios and streaming services. It has been on strike since May 2. Meanwhile, SAG-AFTRA, representing about 160,000 actors, joined the writers on strike on July 14.
WGAW Research & Public Policy Director Laura Blum-Smith stated, “We’re transitioning from a period of rapid investment and competition that brought about new and diverse content to a monopolistic model that will concentrate control over entertainment programming in the hands of just a few large and powerful corporations. For writers, that means fewer buyers for their work, employers who exert more leverage in individual deal negotiations, and depressed pay and working conditions.”
This isn’t the first time the WGA has gone on strike. The most notable was in 2007-2008, which lasted 100 days and profoundly impacted the industry, leading to shortened TV seasons, delayed movies, and significant financial losses. The strike involved all 12,000 film and television screenwriters of the WGA, East (WGAE) and WGA, West (WGAW).
How Could This Impact AMC?
The most immediate impact would be a reduction in the number of new films being released. With writers and actors on strike, movie productions could be delayed or halted. This means fewer new movies for AMC Theatres to showcase, which could lead to decreased ticket sales.
Like many in the entertainment industry, AMC Theatres has already faced significant financial challenges due to the COVID-19 pandemic. A prolonged strike, leading to fewer movie releases, could further strain the company’s finances. Reduced ticket sales and concessions revenue could exacerbate these challenges.
With potential delays in new movie releases, more consumers might turn to streaming platforms for entertainment. This shift could pose a competitive threat to AMC Theatres, especially if streaming platforms can capitalize on the content gap.
A Catalyst For Innovation?
On the flip side, this could present a potential catalyst for innovation and outside-the-box thinking. To attract audiences during the strike, AMC might need to ramp up its marketing efforts. This could include special promotions, discounts, or loyalty program incentives to encourage moviegoers to visit despite the lack of new content, as well as special events like the Taylor Swift concert series.
Will AMC Become A Penny Stock…Again
AMC stock is no stranger to the sub-$5 range. Even before the meme stock mayhem, shares were pushed to extreme lows. The Ape Movement greatly impacted the AMC stock price during the pandemic with thousands of retail traders buying shares in support of the fight against funds who shorted shares.
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While the historical move would see prices explode to record levels, that would not become a prolonged trend as the stock fell. This would continue until shares ultimately dipped back below the $5 threshold until the recent reverse split.
Will AMC become a penny stock again? This week shares are trading at 52-week lows of $7.71. These are also fresh all-time lows for the meme stock. Meanwhile, most analysts have a Neutral or weaker rating on the company. Most recently, B. Riley, which has AMC stock at Neutral, adjusted its price target to 45 after the split.
Whether or not AMC stock drops below $5 once again is yet to be seen. However, shares have slipped more than 80% since August 7th from a post-split-adjusted price of $50.40 to this week’s $7.71 lows.
