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soared nearly 20% on Tuesday. The massive jump came even after an analyst at Citi Research argued the stock is overvalued.
Citi Research analyst Jason Bazinet maintained a Sell rating on AMC shares (ticker: AMC) but upped his price target to $3.70 from $2 in a note Monday evening.
He said the price target reflects the company’s first-quarter earnings report and its successful efforts raising cash by selling shares. Earlier on Monday, B. Riley analyst Eric Wold argued a successful overseas box office debut for Fast and Furious 9 bodes well for AMC and other theater chains.
“We maintain our Sell rating, as we believe AMC remains overvalued at current levels,” Bazinet wrote.
The $3.70 target is Bazinet’s base case. A bull case scenario would be if the U.S. box office recovers faster than expected and AMC’s 2023 adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, hits $750 million, he wrote. In that case, he thinks the stock would be worth $5.15—well below recent levels.
“AMC was able to address near-term liquidity concerns through debt raises and a debt exchange,” Bazinet wrote. “However, we see the company’s elevated leverage as an added risk to an uncertain recovery. And, we see recent industry developments indicating that the strategic role of exhibitors is diminishing.”
The bearish take clearly didn’t slow down AMC’s run. The stock closed up about 20% to $16.41 on Tuesday. That’s AMC stock’s highest close since the January surge in highly-shorted companies, according to Dow Jones Market Data. AMC shares are up 674% year-to-date. GameStop (GME), meanwhile, rose 16% on Tuesday. AMC is set to open up 9.6%, while GameStop is up 10% in premarket trading.
The company is among the most popular names in online forums like Reddit’s WallStreetBets community. They’re betting that AMC’s still elevated short interest will lead to a massive squeeze, sending shares to new highs. AMC CEO
Adam Aron
even acknowledged such new shareholders during this month’s earnings call.
Write to Connor Smith at connor.smith@barrons.com
