AMC Entertainment (NYSE:AMC) is scheduled to report its fourth quarter 2022 results on February 28, after the market closes. The Street expects the company to post a loss of $0.20, compared to a loss of $0.16 in the prior-year quarter. Meanwhile, revenue expectations are pegged at $1.05 billion, reflecting a decline of 10.3%.
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AMC Entertainment is engaged in the theatrical exhibition business and owns, operates, or has interests in theaters primarily located in the U.S. and Europe.
The company is expected to have benefited from a surge in theatrical releases during the quarter. Furthermore, AMC’s top line might have received a boost from some of the major releases, including Warner Bros.’ (WBD) Black Adam and Walt Disney’s (DIS) Avatar: The Way of Water.
Moving on, audience turnout volumes might have increased in Q4 but are still expected to have remained below pre-pandemic levels. Meanwhile, the costs to service the debt accrued during the pandemic might have weighed on the company’s profitability.
Recent Development
Last month, AMC disclosed plans to raise considerable equity and convert AMC Preferred Equity units (NYSE:APE) into common shares. The motion is up for voting in a special shareholders meeting, scheduled on March 14.
Meanwhile, a Delaware judge has agreed to hold a preliminary injunction hearing on April 27 in relation to the conversion. The stock rallied about 23% yesterday on the news, as it pointed at a possible delay in conversion.
What is the Future of AMC Stock?
AMC’s CEO Adam Aron is optimistic about the company’s performance in 2023. He expects 35% more movies to be released this year in comparison to 2022, as the theater industry is recovering from the pandemic-related slowdown. Nevertheless, the company continues to struggle with its debt burden.
AMC stock has received two Hold and one Sell recommendation from Wall Street analysts, translating into a Moderate Sell consensus rating. The average price target of $3.25 represents a downside potential of 57.3%.
Ending Thoughts
AMC is poised to deliver strong growth in 2023 based on a rise in theatrical releases and more people visiting theaters. However, increased costs due to inflation and high debt balance could continue to impact its profitability. Further, based on the average price target, analysts estimate a downside in the stock following a strong rally in the meme stock so far this year.
