- AMC stock rallied 16.82% in a month and 19.08% YTD but fell 52.17% in a year.
- AMC Entertainments awaits a nod for converting preferred stock to its common stock.
AMC Entertainment Holdings Inc. (NYSE: AMC) will report Q2 earnings on August 8 2023. With the AMC stock conversion issue, investors are skeptical. Investors are in dilemma whether to rejoice or be tensed about the proposed conversion of AMC Preferred Equity Units into AMC stock. However, a nod, if any, from the authority would set the plan in motion.
AMC Entertainment Holdings (AMC) Stock: Earnings Expectations and Technical Analysis
AMC wishes to convert its preferred class of shares, currently trading as NYSE: APE, into common stock. To counter a heavy debt, in 2022, the company, in an attempt to raise funds, created APE, which traded at a discount from common stock. If the conversion request passed the authorities, the two would merge.
As a result, the price of preferred shares would rise while the price of common stock could plummet. This is a significant concern among investors before earnings. At press time, AMC stock is trading at $4.93, gaining 0.4073%; the previous close and open were $4.91. The 52-week range is from $3.77 to $27.50, meaning the current AMC price is closer to the bottom level.
With an average volume of $29.62 Million shares, the market cap is $4.526 Billion. The trailing twelve-month (TTM) earnings per share (EPS) is minus $0.67. Considering the merge scenario, analysts estimated the price target at $2.15 with a 56.4% downside and provided a 1.25 rating for a strong sell.
AMC reported its last earnings on May 5, 2023, where the reported revenue of $954.4 Million surpassed the expected value of $938.201 Million by 1.73%. Compared to the previous quarter, the revenue gained 21.47%. At the same time, the reported earnings of minus $0.17 per share failed to beat the estimated value of negative $0.157 per share by 8.38%.
Compared to the previous quarter, EPS jumped by 76.93%. Despite these positive earnings, AMC stock price fell nearly 28% in the following sessions before going back up. AMC will report its subsequent earnings on August 8, 2023, where revenue should be $1.287 Billion and the EPS shall be minus $0.041.
How Will the Stock Merge Affect AMC Financials?
Since the authorities denied the news of the stock merger, AMC stock has gained 67%. Even though the gain is positive news for the investors because the union could have diluted the stock, there is still a substantial underlying problem. If the merger did not go as planned, the bond could expire, creating a need for refinancing.
Currently, AMC Entertainment Holdings Inc. has dropped the idea of variable pricing plans and is struggling to pay debts. To cover the funding gap, AMC reduced the investments in theater renovations and issued new shares. With $496 Million cash-in-hand and bond maturing soon, AMC’s liquidity could dry by 2024 if no more stocks were issued.
AMC Entertainment Holdings Inc. (AMC Stock): Candle Exploration
AMC stock price action is marred with quick gains followed by a drop. Descending 200EMA hints toward a price drop and relatively flat 50EMA hints at a sideways movement. Unless the stock price does not cross and sustains for a considerable time above immediate resistance at $6.07, chances of the rally are slim.
Positive earnings may not boost the price above $6.00. Also, negative earnings might not create a new 52-week low. Depleting funds and denial of stock mergers could push prices to new lows.
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