What's Going On With AMC Entertainment Stock?

AMC Entertainment Holdings Inc AMC shares are trading higher Thursday. The stock appears to be bouncing back after experiencing heavy selling pressure for most of the week. 

What Happened: AMC shares tanked Monday after the company received court approval for its revised stock conversion plan, which includes a 10-for-1 reverse stock split set to go into effect on Aug. 25. AMC Preferred Equity Units APE will be converted to common stock, increasing the total number of authorized shares of AMC's Class A common stock from approximately 524.2 million to 550 million.

Following the news, Roth MKM analyst Eric Handler reiterated AMC with a Sell rating and a price target of 50 cents, citing an "upside down capital structure."

In a note to clients, the Roth MKM analyst said he continues to believe shares are trading "at an irrational valuation." Handler argued that AMC would need to generate $978 million of adjusted EBITDA to justify its current price, which is 78% higher than the analyst's forecast for 2024 and 5% higher than AMC's all-time adjusted EBITDA high of $929 million in 2018. 

"Management will also initiate an ATM program for the sale of up to 25mn shares, which we believe will be immediately tapped to take advantage of a more attractive post-reverse split share price," the Roth MKM analyst said. 

See Also: AMC Shares Tank On APE Conversion Plans: Analysts, Jim Cramer And More Say It's 'A Clearer Path For AMC To Survive'

AMC Price Action: AMC shares are down approximately 22% over the last five trading sessions. The stock was up 4.67% at $3.93 at the time of writing, according to Benzinga Pro.

Photo: Paul Sableman from Flickr.