IS IT GOOD TO BUY OR SELL AMC STOCK NOW?
AMC (American multi-cinema) Entertainment Holding, Inc. is an American movie theater chain. AMC is one of the largest movie theater chains in the world. Its headquarters is in Leawood, Kansas. It was founded in 1920, and AMC has the largest share of the U.S. theater market. Its current average share price is $12 holding 100M shares approximately.
According to fundamental and technical analysis, AMC stock is not performing well as compared the previous years. But it never means that the company is suffering economic conditions in the United States have deteriorated and sentiment in the market is relatively pessimistic at both macro and micro levels.
Is AMC stock good for the short run?
The CEO of AMC Adam Aron had a plan to generate short-term value for the company and its shareholders. He aimed to match the company's high valuation with its main fundamentals. But it was very much difficult for him to do. Because the money increased from the company's share price had been used for two main objectives:
First, to make the infrastructure strong. A lot of money was invested in it. Because a movie theater's enjoyment depends on it. Second, a lot of debts had to be paid to creditors. That is why AMC had to cut the share price and the trend caught bearish for a short run. So in my opinion, buying the short-term stock of AMC would not be a good suggestion.
AMC has announced plans to invest in its movie theaters. It is planning to upgrade Cinema Premium screens of IMAX and Dolby. It is also going to start up the NFT programs. This will attract youngsters. So for this, the company should have high liquidity to be cash available. So it will sell short-term securities in the money market. Furthermore, to decrease interest payments in the future AMC is in the process of discussing how to finance its $5 billion debt with various shareholders. So in this situation, short-term stock can be a good option.
Moreover, if we think about the future investment. AMC has very good plans to retain its famous branded popcorn. AMC is also planning to invest in gold and silver mining company Hycroft (HYMC). It can be good in the long term. But it will not be very beneficial for short-term investment.
Finally, In the short run, AMC stock is not suitable for trading, stocks should be sold under these circumstances because it has been observed that the chart is in a bullish trend. Furthermore, the technical analysis is showing that AMC stock could not move above the 200-day simple moving average on different occasions from the beginning of 2022 making lower lows. However, it is too early to tell that the pattern would get bearish as expected. For this to happen, the stock price would have to move above $15 in the next few weeks.
AMC stock for the long run
In the long term, AMC stock is very good to buy. There are three reasons to buy AMC stock in the long term. Firstly, it is the largest movie amphitheater in the US, its CEO Adam Aron announced that it would not be bankrupt, it has a lot of shares on NASDAQ and NYSE. Additionally, there are always increments in the demand for cinemas. Secondly, by analyzing the charts of the stock, we can predict that the stock price would increase too much sooner or later. because the price increased up to $57 a few months ago. So the recent bullish trend is just for the short term. Thirdly,
Based on year-over-year. Revenue has risen by 610% in the fourth quarter. Revenue from drink and food has increased up to 85% of pre-pandemic levels. That is much better than the 500% of Risen revenue made in the Q4 of 2019.
However, besides all of this, the better news is that AMC earned a handsome profit before interest, depreciation, amortization, and tax. Also, it got enough operating cash flow. Fortunately, the COVID-19 pandemic affected the movie theater business positively. That's why AMC's balance sheet also remained a big concern. In addition to this, most of AMC's shareholders are very loyal. Because they did not withdraw their stock in the bad time, eventually the company began to grow in the long run. Ultimately, management became able to increase a few billion dollars of cash to knock out the threat of bankruptcy.
And now AMC has liquidity and cash flowing of $1.8 billion. So, AMC would not be worried about bankruptcy in the long term. Instead, it will plan and make strategies for its growth.
As we know, AMC is the largest movie theater company in the United States, it has handsome shares in the stock market America like on NYSE and NASDAQ. Additionally, it is very difficult to say that the company would suffer from default, as the reasons are explained above. It is a very good suggestion to invest in the company for a long. However, if you want day trading or swing trading then you must be too clever, conscious, and informative to gain a good profit because in the short term the price would probably go down. Plus, the company is not in the good condition in the short run.