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AMC Entertainment Holdings Inc (NYSE:AMC) shares are trading higher Thursday. The stock appears to be bouncing back after experiencing heavy selling pressure for most of the week.
What Happened: AMC shares tanked Monday after the company received court approval for its revised stock conversion plan, which includes a 10-for-1 reverse stock split set to go into effect on Aug. 25. AMC Preferred Equity Units (NYSE:APE) will be converted to common stock, increasing the total number of authorized shares of AMC's Class A common stock from approximately 524.2 million to 550 million.
Following the news, Roth MKM analyst Eric Handler reiterated AMC with a Sell rating and a price target of 50 cents, citing an "upside down capital structure."
In a note to clients, the Roth MKM analyst said he continues to believe shares are trading "at an irrational valuation." Handler argued that AMC would need to generate $978 million of adjusted EBITDA to justify its current price, which is 78% higher than the analyst's forecast for 2024 and 5% higher than AMC's all-time adjusted EBITDA high of $929 million in 2018.
"Management will also initiate an ATM program for the sale of up to 25mn shares, which we believe will be immediately tapped to take advantage of a more attractive post-reverse split share price," the Roth MKM analyst said.
AMC Price Action: AMC shares are down approximately 22% over the last five trading sessions. The stock was up 4.67% at $3.93 at the time of writing, according to Benzinga Pro.
Photo: Paul Sableman from Flickr.
