AMC Entertainment’s (AMC) shares surged to hit their 52-week high of $20.36 in January 2021 thanks to a short squeeze triggered by the Reddit forum r/wallstreetbets. But the stock has plunged more than 30% since then. Though the company’s theaters are reopening now, we think it’s weak financials could lead to further declines in its share price. Read on.One of the top players in the theater chain space, AMC Entertainment Holdings, Inc., (NYSE:AMC), saw its shares soar to hit their 52-week high of $20.36 on January 27 thanks to a short squeeze triggered by Reddit forum wallstreetbets. However, the stock has declined by 32.8% since then. Its shares rallied after the company announced on May 21 that its previously largest shareholder, China’s the Wanda Group, sold most of its remaining shares in the company. The stock has gained 34.7% over the past month to close yesterday’s trading session at $13.68.
However, the company was losing value prior to the COVID-19 pandemic. It has lost 10.3% over the past three years and 52.3% over the past five years. Furthermore, for the fiscal first quarter ended March 31, AMC’s top line declined 84.2% year-over-year to $148.30 million. Its net loss for the quarter came in at $567.20 million compared to $2,176.30 million in the prior-year period. Its U.S. market’s attendance was 6,239,000 in the quarter, down 84.3% year-over-year. So, even though AMC has been reopening its theaters and its shares have been rallying, we don't think its financials don’t support its price performance.
Here are the factors that we think could influence AMC’s performance in the coming months: