AMC Entertainment (NYSE: AMC) stock price continued its downward trend in 2023 as the company continued diluting its shareholders. The stock, which was highly popular among meme investors, tumbled by over 82% while the S&P 500 index spiked by 25.2%.
Headwinds to continueAMC had a relatively mixed year. On the one hand, the company benefited from the Barbenheimer movies, which were among the top-selling in recent years. Barbie generated over $1.5 billion in sales while Oppenheimer garnered over $1 billion globally. The other top-grossing movies of the year were Super Mario Bro, Guardians of the Galaxy, and Fast X.
These movies helped the company have a relatively strong performance in the third quarter. Its revenue jumped to over $1.4 billion while its adjusted EBITDA and net income rose to more than $194 million and $12 million. Its total trailing twelve-month (TTM) revenue soared to over $1.4 billion.
The challenge for AMC is that it is unsure whether the success of Barbenheimer will be replicated in 2024. A closer look at the upcoming blockbuster movies for 2024 does not reveal any potential hit. Some of the most notable names to watch will be Godzilla x Kong, Bad Boys 4, and Deadpool 3.
The other big issue for AMC is its balance sheet. The company diluted its shareholders several times in 2023. It raised an additional $350 million in November by selling shares. It also raised $325 million in September in a bid to boost its balance sheet.
Most importantly, AMC diluted its shareholders by converting APE preferred to common stock. In all, the total number of outstanding shares jumped from 50 million in 2019 to over 198 million and the process will likely continue.
AMC Entertainment ended last quarter with $729 million in cash and short-term investments. It has added into these funds by issuing more shares. It also has over $4.7 billion in debt, with the biggest maturity coming in 2026.
Looking ahead, I suspect that the company will continue seeing slow revenue growth unless we have a big blockbuster release. At the same time, I don’t expect it to dilute its shareholders again unless the loss-making streak continues.
AMC stock price forecast
Turning to the daily chart, we see that the AMC share price has moved horizontally in the past few months. It remains much lower than the year-to-date high of $75.74 and 2022’s high of $185.91.
I believe that there are better opportunities in the market than AMC at the current levels. At the same time, I also believe that the market has priced in slow revenue growth for 2024 and a potential equity raise.
Therefore, I suspect that the current consolidation is part of the accumulation phase of the Wyckoff Method. If it works, it means that the stock will go through a short squeeze in 2024 as investors buy the dip. If this happens, the shares could move at least to $10 in the coming months. Such a move will be a 60% jump from the current level.
Still, AMC is a high-risk investment since the company is expected to go through a slowdown in 2024.
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