AMC Entertainment struggles with falling stock, high debt load and light blockbuster schedule – CNBC

by | Oct 12, 2022 | Entertainment

The AMC 25 Theatres in Times Square in New York is seen on Tuesday, July 8, 2014.Richard Levine | Corbis News | Getty ImagesAMC Entertainment hit a new 52-week low Wednesday as the movie theater company contends with a massive debt load, dilution of its stock and a film release schedule short on blockbusters.Shares of the world’s largest movie theater company have fallen about 80% to under $6 so far this year, as investors question the company’s capital structure and overall business strategy.The company came back from the brink of bankruptcy in 2021 thanks to millions of retail investors who turned its shares into a meme stock. Since then, AMC has devised several plans to raise more capital to pay down its debts and invest in acquisitions, theater upgrades, a popcorn business and even a gold mine.In its latest effort, AMC issued a dividend to all common shareholders in the form of preferred shares called “APE,” a reference to the “Apes” moniker adopted by meme stock investors. However, analysts say the company was unable to fully capitalize on selling off these new shares before disillusioned investors pulled their support.For now, AMC has enough cash in hand to survive and operate for the next several years, said Eric Handler, media and entertainment analyst at MKM Partners. As of June 30, AMC had availability liquidity of more than $1.17 billion. Its share slump, he added, is “purely about the capital structure.” Even at its depressed price, the stock is overvalued, according to Handler.AMC has also struggled to post a profit in recent quarters, and its debt load is $5 billion, about $2 billion more than its market value. The company amassed the debt prior to the pandemic, when it acquired several smaller theater chains and invested in upgrading its theaters seating and screens. While AMC may have delayed its debt payments, “that doesn’t necessarily mean it’s going to be a favorable environment when …

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