Is the world’s largest movie theater operator, AMC Entertainment (AMC), finally making a comeback? Since being struck by the pandemic, AMC has been struggling to stay afloat. Weak box office demand, a heavy debt load, and massive shareholder dilution to raise immediate cash have kept AMC’s stock in a tough spot for the past three and a half years, especially after it became a favorite of retail investors.
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While AMC is slowly improving its fundamentals and seeing a rebound in domestic box office numbers, it still needs more cash to stay liquid. With share dilution on the horizon, I prefer to step back and place a Hold rating on the stock.
AMC Entertainment (AMC) price history over the past 3 years
Although AMC will benefit from greater box office numbers in 2025, the company’s comeback is still a work in progress. A closer look at its latest developments suggests a mixed picture for 2025, with an upcoming earnings call at the end of this month unlikely to boost investor sentiment.
AMC’s Battle Against Bankruptcy Since the COVID-19 Pandemic
For those who aren’t familiar with AMC, the movie theater chain became one of the main meme stocks during retail investors’ frenzy in 2021. The stock gained the attention of many retail investors and traders due to its high short interest and the possibility of bankruptcy caused by the severe impact COVID-19 had on its core business. While AMC’s market value today is just over $1.26 billion, it was worth $28.44 billion in mid-June 2021.
To give you an idea of how big AMC’s business has struggled, its revenues dropped from $5.02 billion in 2019 to just $1.07 billion in 2020, and it haven’t bounced back to pre-pandemic levels since. But despite the demand drought, the real issue is that AMC had heavily leveraged itself in 2019, right before the pandemic hit, with $10 billion in net debt—double the $5 billion it had in 2018.
AMC Entertainment (AMC) earnings and revenue history dating back to 2018
Arguably, CEO Adam Aron and the management team did what any struggling business would do when its stock price spikes: sell equity. AMC raised around $2 billion between 2020 and 2021 through at-the-market offerings, which diluted shareholders but allowed AMC to pay down $1.8 billion in debt between 2021 and 2022. As the stock price remained volatile and continued attracting retail investors, AMC made smart moves to raise more cash, such as issuing convertible preferred shares. This helped raise an additional $832.7 million in 2023 and another $583.3 million over the last twelve months.
Simply put, since the end of 2022, AMC shareholders have been diluted by a heart-wrenching 71%.
Despite still being on the edge of liquidity with a quick ratio of just 0.4x (meaning AMC only has 40 cents of liquid assets for every dollar of current liabilities), the company is managing to stay afloat. Even though the dilution has caused the stock to drop by about 98% from its peak, the management team has pulled off something almost impossible: keeping AMC from filing for Chapter 11.
Chart showing AMC Entertainment (AMC) debt to assets history dating back to 2018
How Meme Stock Investors Helped Keep AMC Afloat
To be clear, if it weren’t for the nearly $3.5 billion raised through equity issuance over the past five years, driven by the high popularity of its stock (thanks to meme stock investors), AMC would most likely be bankrupt by now.
The business fundamentals are still in slow recovery mode. For example, the company’s EBITDA has been positive since 2022, jumping from a negative $1 billion in 2020 to a positive $397 million in FY2023. Revenues for 2023 finished at $4.36 billion, still around 87% of pre-pandemic levels. The bad news is that the recovery lost momentum in 2024.
Chart showing AMC Entertainment (AMC) revenue history dating back to Q4 2022
The domestic box office in 2024, at $8.57 billion, declined by about 4% compared to 2023, mainly due to a series of headwinds, including the strike by Hollywood actors and directors, which delayed movie releases. In this context, AMC’s revenues over the last twelve months stand at $4 billion—significantly lower than in 2023.
But the bigger picture is that the company is still struggling, largely because of its massive debt load. AMC currently has $7.9 billion in net debt, which has resulted in net interest expenses of $368.2 million over the past year. To give you an idea of how much this is weighing on the company’s profitability, of the $399 million reported in net losses over the past year, a staggering 97% of those losses are due to interest on debt.
Will the Domestic Box Office Rebound in 2025?
As AMC isn’t out of the woods yet, the company must convince investors of a successful turnaround. In addition to renegotiating its debts, the movie theater chain needs to raise cash to reduce its debt load since AMC uses more debt than equity to finance its operations or investments, with long-term debt making up 115% of its capital.
To move forward, the company has two unsteady options: (1) raise more equity, risking further shareholder dilution and putting pressure on its stock price, or (2) hope for a strong rebound in box-office results to get back to pre-pandemic levels.
On the second option, AMC CEO Adam Aron is optimistic about 2025 but clarified that he expects big blockbusters, even though smaller studios produce more movies. In fact, the Q4 2024 box office performance was better than expected, helped by the sequel to Moana and the fantasy musical film Wicked, which pushed AMC’s cumulative gross up by 26% year-over-year.
Since the 2025 box office will likely face softer comparisons due to the Hollywood strikes affecting 2024 productions, I think it’s reasonable to expect a 5% to 7% increase from the $8.57 billion in 2024.
A Dive Into AMC’s Q4 Earnings
Looking ahead, AMC is set to report its earnings on February 25th after the closing bell. The company is expected to post a loss per share of 17 cents, with revenues of around $1.29 billion, reflecting a 17% annual increase. For 2024, total revenues are expected to reach $4.62 billion, down 4% year-over-year.
AMC Entertainment (AMC) earnings forecast prior to upcoming earnings call on February 25th 2025
While better-than-expected domestic box office numbers in Q4 might surprise investors and boost AMC’s Q4 numbers, I believe investors are more inclined to consider the FY2025 outlook, as this could finally be the year AMC’s revenues surpass pre-pandemic levels.
Additionally, AMC’s debt situation will be crucial moving forward, and much will depend on how the management team attempts to pay down the company’s mammoth debt. In Q3, AMC announced an extension of $2.4 billion in long-term debt maturities. Given that debt interest at current levels may become unsustainable, I expect AMC will continue repaying its debt and issuing more equity throughout 2025. This could be key to a successful turnaround, but it will likely continue putting downward pressure on AMC’s share price.
Is AMC Entertainment a Buy, Hold, or Sell?
Given AMC’s current situation, it’s no surprise that Wall Street’s consensus isn’t exactly optimistic, but it’s not ultra-negative either. Over the past three months, all four analysts covering the stock have rated AMC as a Hold. AMC’s average price target is $3.63 per share, which suggests a 6% upside potential from the current price.
AMC Entertainment (AMC) stock forecast for the next 12 months including a high, average, and low price target
AMC Entertainment has survived thanks to support from meme stock investors and strategic capital raises, but its recovery remains sluggish. With significant debt and ongoing liquidity challenges, the company faces difficult decisions—potentially further shareholder dilution or relying on a box office resurgence.
Although Q4 results surpassed expectations, the outlook for 2025 appears both promising and uncertain. Like most Wall Street analysts, I remain cautious, staying on the sidelines rather than going bearish on America’s largest movie theater chain.
