AMC Entertainment (NYSE:AMC) stock declined more than 14% yesterday after the company disclosed a $250 million at-the-market (ATM) offering of its common stock. AMC aims to shore up its balance sheet with the stock sale. The move comes after the company’s first-quarter performance was impacted by weak box office revenues due to the strikes by Hollywood writers and actors in 2023.
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The company seeks to use the proceeds from this sale to bolster liquidity position and repay debt, and for general corporate purposes.
It is worth mentioning that AMC completed a similar ATM offering in December 2023, raising about $350 million. As of December 31, 2023, AMC’s financial position reflected total debt (including finance leases) of $4.56 billion and cash reserves of $884.3 million.
Is AMC a Buy, Sell, or Hold?
Delays in film releases stemming from last year’s strikes are expected to dampen AMC’s performance in the near term. Additionally, AMC’s high debt levels and ongoing capital-raising activities continue to weigh on investor sentiment.
On TipRanks, AMC has a Moderate Sell consensus rating based on four Hold and three Sell ratings. The analysts’ average price target on AMC stock of $5.22 implies 40.3% upside potential. Shares of the company have declined about 53% in the past six months.
