Movie theater chain AMC Entertainment (AMC) posted an upbeat quarter on Monday this week, showing it’s starting to build momentum toward a turnaround. Leverage is still high and liquidity remains a considerable concern, but even small steps to adjust operations and pursue sustainable growth have helped reduce the risk of an imminent cash crunch. That optimism helped shares jump more than 8% shortly after the Q2 earnings release. After some choppy trading sessions since Monday, the stock has consolidated around $3.075 per share.
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Given that AMC’s high leverage distorts traditional valuation metrics—due to heavy debt costs and financial risk, ongoing cash burn, and a constant need for financing that leads to frequent shareholder dilution—it’s still too risky, in my view, to take a bullish stance.
However, evident progress in refinancing, improved liquidity, better box office trends, and strong operational execution from management also argue against a decline. So, for now, I’m still Neutral on AMC Entertainment.
Breaking Down AMC’s Debt and Liquidity
A big part of AMC’s current story revolves around its need to stabilize liquidity through funding—likely causing shareholder dilution—and its ability to roll over its massive debt load. To put it in perspective, AMC has a net debt of $7.9 billion and generated just $271.3 million in EBITDA over the past twelve months, meaning its leverage ratio is a worrying 29.2x.
In the latest quarter, AMC reported interest expenses of $128.6 million. If we annualize that, the effective interest rate on its net debt is about 6.5%, which comes out to roughly $514.4 million per year. The company has managed to generate a positive unleveraged free cash flow of $49 million over the last year (including $89 million in the previous quarter).
Still, once debt costs are factored in, the implied cash burn jumps to $465 million annually. That’s almost precisely what AMC has on hand—at the end of Q2, cash and equivalents stood at $423.7 million (not counting $51 million in restricted cash).
To understand how tight things are, this means AMC has roughly 11 months of cash runway at its current burn rate. So, without refinancing or raising more capital, the company could run out of cash in less than a year if nothing changes.
AMC Extending Cash Runway and Boosting Profits
But the real question is: is AMC actually making progress? Looking at the annual cash burn of about $465.4 million after debt service, and knowing that unlevered free cash flow moves roughly in line with EBITDA growth, AMC needs to generate this extra amount each year just to break even.
Add the $271.3 million EBITDA from the past twelve months, and AMC would theoretically need to hit $736.7 million EBITDA to break even on levered free cash flow—about 2.7 times the current EBITDA.
That’s a challenging mission, but the most recent quarter gave a better impression, mainly due to what CEO Adam Aron called “impressive operating leverage.”
“Impressive” might be a bit of a stretch, but the improvement is mostly tied to debt refinancing. That ~11-month cash runway we talked about before assumed no changes in operations or financing. Yet, AMC’s management made it clear in Q2 that they have “addressed all of our 2026 debt maturities, pushing them out to 2029,” thanks to a series of major transactions.
Other moves include converting $143 million of debt into equity, which cuts future interest expenses at the cost of shareholder dilution (again). Plus, AMC boosted profitability per patron (admissions revenue per patron up 7.5% to $12.14; food & beverage revenue per patron up 8.3% to $7.95). Combined with cost cuts, this helped the company post positive free cash flow.
I would still say this is good news because extending the cash runway gives AMC more breathing room, even though dilution remains a necessary evil to ease the heavy debt burden. This relief allows AMC to focus on improving profitability without the immediate pressure of looming debt.
AMC Sees Hope in Box Office Rebound and Efficiency
The second key point CEO Adam Aron highlighted during the earnings call was his indomitable “confidence about the resurgence of the industry box office.” Alongside progress on operating leverage in Q2, AMC showed strong optimism about a lasting rebound in the movie theater business, backed by solid recent data.
Moviegoer numbers rose 25.6% year-over-year, with around 63 million guests visiting AMC theaters. Consolidated revenues rose 35.6% to $1.4 billion compared to the same quarter last year, while adjusted EBITDA nearly quadrupled versus Q2 2024, reaching $189.2 million. This was also driven by record per-patron spending, showing that pricing strategies and premium experiences are paying off.
Looking ahead, AMC’s management projects box office revenues in full-year 2025 to increase by $500 million to $900 million compared to 2024, with 2026 expected to top 2025. In fact, analysts already forecast 2026 revenues to exceed $5 billion for the first time, surpassing pre-pandemic levels. It’s worth noting that although attendance is still about 35% below Q2 2019 numbers, AMC’s improved contribution margin per patron and operational efficiencies should allow EBITDA to approach the $500 million annual mark.
In short, AMC has run its operations very efficiently, and Q2 was a strong step forward in the plan to get AMC “out of the woods.” There’s still a long road ahead, but the progress seems encouraging. So much so that, just last month, analysts revised their EPS guidance for Q3 to -$0.07—a 42% improvement over previous estimates—and to -$0.02 for Q4, 16% better than previously expected.
Is AMC a Good Stock to Buy?
The consensus among analysts is pretty neutral. Out of nine Wall Street experts covering AMC stock, one is bullish, one is bearish, and the other seven are neutral. AMC’s average stock target price sits at $3.10 per share, implying a modest upside of just 2.3% from the current share price.
AMC Accelerates Momentum Toward a Turnaround
AMC is still taking baby steps, but it’s moving in the right direction by improving its balance sheet, rolling over debt, renegotiating with creditors, and keeping liquidity stable. The apparent improvement in the domestic box office is a welcome sign, and combined with solid operational execution, it’s creating a path for EBITDA to soon reach record levels, with revenues expected to finally surpass pre-pandemic numbers next year.
That said, AMC still has a long way to go in deleveraging before it can be truly “out of the woods,” and betting on a smooth turnaround without more bumps ahead is definitely risky. However, I don’t see the thesis weakening enough to justify a Sell rating right now, so a Hold stance still seems more appropriate.