AMC finds itself in quite a pickle, caught between a slow stretch at the box office and a mountain of corporate debt. This week saw the latest chapter in that struggle, with AMC taking steps to issue new shares to raise an additional $250 million in cash. This promoted a fall of 14% in its current share price, now down to $3.72 per share. This is well below the heights of its meme stock days in 2021 when shares were trading above $70.
When retail investors drove up AMC’s stock price in early 2021, the company leveraged its fame to pull in funds that it could use to make it through the lows of the pandemic and pay off some of its outstanding debts. In the three years before the pandemic, AMC borrowed extensively to fund an acquisition spree that made it by far the world’s largest movie theatre chain.
The situation began to turn around with a healthy and recovering box office last year. But the Hollywood strikes of 2023 have contributed to a soft beginning for 2024, putting pressure once again on the overleveraged exhibitor. Some financial analysts see more trouble ahead, with Moody’s Investor Service forecasting a “potential balance sheet restructuring…given AMC’s untenable debt capital structure.”