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AMC is worth $1 a share because its current price doesn’t reflect fundamental value, says stock analyst

According to Alan Gould of Loop Capital Market, AMC stock is only worth $1 per share when valued on a fundamental basis.

In an interview with CNBC on Monday, Gould reiterated his “sell” rating and $1 per share price target for AMC despite the Reddit favorite’s recent resurgence.

“For me, the stock just doesn’t reflect the fundamental value. I realize that can happen for a while, but ultimately I think it comes down to fundamentals,” Gould said.

Gould pointed to declining movie theater attendance in the interview and a shrinking “theatrical window” that pushes new releases out of theaters within weeks.

“The fundamentals of this industry have been steadily declining for years… Footfall has been declining steadily since 2000,” Gould said.

The Loop Capital Market analyst praised AMC for its continued capital raises, saying the company was “as smart as possible” in taking advantage of the high share price to issue stock, gaining capital to fund its operations.

Gould said CEO Adam Aron should continue to raise capital at current high valuations to find acquisitions and more.

“If I were Adam Aron, I would issue as many shares as possible,” he said.

The analyst pointed to a number of bearish points for AMC stock, including declining theatrical release numbers from legacy studios and Netflix’s continued dominance.

Gould also noted that few theaters have closed during the pandemic as planned, meaning there are “too many screens” available for lagging industry demand.

Gould isn’t the only analyst who doesn’t see the same value as Reddit marketers in AMC’s business either.

Citi analyst Jason Bazinet reiterated his “sell” rating on AMC stock last week, but nearly doubled his price target on the world’s largest cinema chain to $3.70 vs. $2, citing the easing of short-term liquidity problems after the debt increase.

Bazinet added that the company’s “high leverage” is an “additional risk”, and said recent industry developments indicate that “the strategic role of exhibitors is diminishing”.

Despite analysts’ bearish trend, AMC shares jumped double digits on Monday after the company announced a $230.5 million capital raise to help it “go on the attack” with acquisitions .

Traders on Reddit continue to pile into the name, hoping to force a short squeeze like they did earlier this year. As of May 26, AMC had a short stake of around 20%, according to S3 partner data.

However, according to data from HypeEquity, an analytics firm that analyzes 23 million retail investors and Reddit in real time, interest in BlackBerry beat AMC over the weekend. As a result, BlackBerry stock jumped 10% on Monday.

The forums on Reddit were filled with traders looking for the next AMC or GameStop this weekend. One trader even remarked, “It’s not worth buying AMC anymore, this train has already passed,” in the weekend thread, echoing the sentiments of other traders.