Brace for an 80% crash in AMC shares: Wedbush Securities
AMC Entertainment Holdings Inc (NYSE: AMC) has tanked roughly 60% over the past couple of weeks but the pain is far from over, says Alicia Reese. She’s an Equity Research Analyst at Wedbush Securities.
AMC shares should be worth $2.0 onlyCopy link to section
On Tuesday, Reese reiterated her “underperform” rating on AMC shares and lowered the price objective to $2.0 that represents about an 80% downside from here.
The dovish call comes a day after AMC had its preferred equity units (APE) debut on the New York Stock Exchange, which the analyst sees as effectively a two-for-one stock split.
APE in effect created a two-for-one stock split, with half listed under AMC and half under APE. At the end of APE’s first day, the combined shares lost $800 million in enterprise value from Friday’s closing price of $18.01.
Box office ticket sales are still weakCopy link to section
It’s the “dilution” that lowers the share price after a two-for-one stock split. The preferred stock ended Tuesday at $6.0 while AMC was way above at $10.46. Reese noted:
While it makes little sense for APE to trade below AMC, we think that it reflects concerns over impending dilution.
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Other headwinds still in the face of AMC Entertainment Holdings Inc include not enough blockbusters to fuel a significant increase in the box office ticket sales. On top of that, added competition from the “streamers” is also weighing it down.
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Earlier this month, however, the world’s largest cinema chain said it lost less money in its fiscal second quarter than the analysts had forecast.
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