The movie theater chain AMC Entertainment (AMC) has continued to underperform year-to-date. However, recent developments have prompted some bulls to take another look at the stock with fresh optimism. Since the company’s Q1 earnings were reported at the beginning of May, in which it beat both top and bottom line estimates, AMC’s shares staged a strong rally of almost 50% over the following 20 trading sessions.
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This was fueled by news of record-breaking box-office results over the Memorial Day weekend—one of the best 5-day stretches for AMC in a decade. That was enough to send the stock soaring, helped along by high short interest of around 14.5% of outstanding shares and very depressed valuation multiples. The rally, however, was short-lived. Shares have now settled back to a more modest gain of about 11% since Q1, and they’re still down nearly 24% for the year.
In my view, this is AMC’s reality: a stock that remains highly volatile, stuck in survival mode, trying to convince the market that improving movie-going trends can pave the way for a more sustainable turnaround, even as its balance sheet remains heavy with debt.
Recognizing that sooner or later AMC’s slow pace of cash flow improvement may mean more dilution just to keep the lights on, I don’t believe the share price can head consistently higher, though short-term enthusiasm still leaves room for occasional small-scale short squeezes. All things considered, I’m sticking with a Hold stance on AMC.
From Blockbuster to Balance Sheet Battles
First of all, AMC’s business was decimated during the COVID-19 pandemic, and almost five years later, it remains distant from returning its top line to pre-pandemic levels.
In 2018 and 2019, AMC’s revenues reached around $5 billion per year. In 2020, they collapsed to just $1 billion, and since then, the company hasn’t managed to break past $4.3 billion annually (which it last hit in 2023).
The real disappointment came last year: although AMC seemed to be on track to recover its top line, revenues came in at just $4.1 billion, down 4% versus 2023, according to Main Street Data. A weaker movie slate, partly due to the Hollywood strikes, significantly impacted box office takings in 2024. The bad news is that market expectations for 2025 still fall short of the $5 billion mark, sitting at around $5 billion. It’s only in 2026 that revenues are expected to reach about $5.29 billion.
Of course, AMC’s problems run much deeper than just soft revenues. The company, the largest movie theater chain in the world, spent the last decade accumulating debt through aggressive acquisitions and substantial investments in theater upgrades to compete with streaming services. As a result, it incurred a massive debt load, with leverage (net debt/EBITDA) exceeding 7x in 2019. However, profits didn’t keep pace with rising costs and interest expenses, putting increasing pressure on cash flow. So, AMC continued to issue new debt to refinance old obligations and fund capital expenditures.
The problem is that EBITDA turned negative and collapsed during the pandemic, as theaters shut down completely. And even now, with EBITDA back in positive territory, AMC’s leverage ratio remains extremely stretched, sitting north of 20x.
AMC’s Balance Sheet and Cash Flow Status
What once appeared to be an insurmountable debt burden for AMC took a surprising turn when the company benefited from the meme stock phenomenon. During the 2020–2021 market frenzy, AMC’s stock surged dramatically despite its underlying financial struggles. Seizing the moment, management capitalized on the inflated share price by issuing new equity, a move that significantly alleviated pressure on the company’s balance sheet.
Between 2020 and 2021, AMC raised $2 billion through equity offerings—part of a broader effort that has seen the company raise over $3.3 billion in the past five years. However, this capital came at the expense of substantial shareholder dilution. Unsurprisingly, the stock price declined sharply once the meme stock momentum faded.
Since 2023, though, AMC’s financial picture has shown signs of stabilization. EBITDA has recovered to approximately half of pre-pandemic levels, indicating a rebound in operating cash flow.
To assess AMC’s liquidity position, it’s helpful to examine its recent cash usage. Over the past four quarters, the company recorded a net cash burn of $232.5 million, or roughly $19.4 million per month. With $770 million in cash on hand at the end of the last quarter, AMC appears to have a liquidity runway of around 40 months. This suggests that, at least for the near to medium term, the company is not facing any immediate cash flow or solvency risks.
Why AMC Isn’t Out of the Woods Just Yet
On one hand, AMC’s current cash position looks somewhat comfortable compared to the last few years. But the company keeps raising capital—diluting shareholders and putting pressure on the stock price—because it still needs to refinance heavy debt and upcoming maturities, protect itself against volatility and uncertainties in a business that isn’t as strong as it used to be, and, most importantly, continue investing to stay competitive in its niche.
As long as AMC focuses on raising cash, valuation metrics can get blurry. Still, trading at just 0.25x sales—about 80% below the industry average—with a damaged $1.3 billion market cap shows the market is pricing AMC’s revenue way too cheaply. This also reflects strong skepticism about future profits and cash flow. In other words, AMC remains a high-risk play with uncertainty around the sustainability of its turnaround.
That said, for the first 25 weeks of this year, domestic box office revenues were actually up 16% versus the same period last year, rising from $3.3 billion to $3.9 billion. However, consensus estimates suggest that AMC will grow revenues by only 7% this year compared to last, and EPS is expected to come in at a negative 68 cents, although that would still represent almost a 50% improvement compared to last year.
What is the Target Price for AMC?
Right now, there are no bulls on Wall Street when it comes to AMC. Of the seven analysts covering the stock, six have a neutral rating, and one is bearish. AMC’s average stock price target is $2.92, implying a potential downside of approximately 5% compared to the current share price.
AMC Likely to Remain in Survival Mode for a While
It remains difficult to fully embrace AMC’s turnaround story. While its liquidity position suggests bankruptcy is not an immediate concern, the company’s continued reliance on shareholder dilution to raise capital is a red flag, particularly given the capital-intensive nature of the movie theater industry, which is experiencing only a partial and uneven recovery.
AMC is likely to remain volatile in the coming years, but I don’t see another meme-stock-style short squeeze, like the one seen with GameStop (GME), meaningfully changing the company’s long-term outlook. At its core, AMC remains a high-risk enterprise operating in a prolonged state of financial uncertainty—a dynamic that is unlikely to shift quickly.
That said, with the stock now trading at very low valuation multiples and a more limited downside than in the past, issuing a Sell rating may be overly harsh and potentially counterproductive. A more neutral stance could be justified given the current risk-reward balance.