Can AMC Stock Touch $1000?

Can AMC Stock Touch $1000? The article discusses future price targets of AMC stock and also talks about what can help AMC stock reach $1000.

Latest AMC Stock Price

Can AMC Stock Touch $1000?

There is no doubt that AMC Entertainments Holdings Inc is going through a tough time since the start of the pandemic. A meme rally helped the company to save itself from the brink of bankruptcy, but since it touched $60 on 18th June 2021 on the backdrop of frenzy trading by retail investors famously known as “Apes”, the stock has just turned into a penny stock.

In the last two years, the company has made some weird decisions like acquiring Hycroft Mining which has unrelated business with AMC Entertainment, but the decision was solely based on the fact that it was also on the verge of collapse. The fact remains that the share price has fallen 92.7% from the high of $60 (as of 16.03.2023).

Let us see where AMC stock is headed in the short to medium term. Can it claim the $1000 mark?

Can AMC Stock Touch $1000? Bear Case Scenario

It is a loss-making company – The entertainment industry is trying to recover from the jolt of pandemic-induced lockdowns. AMC’s revenue has almost increased three times since 2020.

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*Source: Tradingview

But the sad part is its net income is still negative.

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*Source: Tradingview

And the worrisome point is its revenue has become stagnant for the last four quarters and its profit margins are also sloping downwards signaling a bleak possibility of turning net income into positive territory anytime soon.

In the latest quarter ended December 31st, 2022, the company reported a revenue of $990 million down by 15% from the same quarter a year ago. Moreover, the profit margins have reduced from negative 11% to 29%. It all indicates that the company is not in a fundamentally strong position and it can not grow its share price organically.

Investors approve reverse split and APE share conversion- In November 2022, AMC came up with a proposal of converting the previously issued APE shares, meant as a special dividend for loyal investors to be converted into AMC shares which would help the company to swap debt with equity shares and raise fresh capital. On Tuesday, March 14th, 2023, investors approved the conversion of APE shares into normal AMC shares. Also, they have approved 1 for 10 reverse stock split. The reverse split is meant to take out the stock from the status of penny stock. However, it is not received well by the investor community and the share price fell 15% on Tuesday after the approval.

The current number of outstanding shares for APE and AMC is 516.84 million each, with the proposal passed the count will be increased by 2 and then a 1:10 reverse split means it is effectively a 1:5 reverse split. But the reverse split is never taken in good spirits in the market.

Can AMC Stock Touch $1000? Bull Case Scenario

Risk for Short Squeeze- With AMC, the only possibility for a share price run in short term is a short squeeze. Something similar happened back in 2021 and conditions are building up for a short squeeze again in the AMC. With the proposal of conversion of APE shares into AMC shares, there is a price difference between the two-share prices. APE shares are currently trading at $1.38 and AMC shares are trading at $4.58. An arbitrage trade would be shorting AMC shares and going long on APE shares, but it is not easily said than done.

If a considerable number of shorts are built in AMC, there is always a risk of a short squeeze rally in the stock just like a couple of years back.

Can AMC Stock Touch $1000? Conclusion

AMC is a fundamentally weak company with not a great balance sheet to showcase. However, management time and again weird decisions like announcing APE shares and acquiring Hycroft Mining have not helped either.

The only means left with the company for lifting the share price is a reverse split or a short squeeze in the near term. It is very hard to believe that AMC can lift its share price organically.

Can AMC Stock Touch $1000?

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