How so? Pre-pandemic AMC was at $7 per share, which might seem reasonable compared to the current $8 share price until you realize they diluted their shares by more than 3X during the pandemic via ATM offerings.
For AMC's current valuation to match pre-pandemic levels, the share price would have to fall by ~75%.
It looks like it jumped from ~$2 to $20 at the end of January.
I do think the coronavirus lockdown might have created more people that found they didn't miss the theater than those that did. And it also opened up faster to video channels that might be difficult to take back.
The $2->$20 bump was entirely the result of WallStreetBets pumping and others bandwagoning, but it's not an unrealistic valuation. It wasn't completely insane like GME. AMC only went up to $20 for one day (near its Oct 2018 price) and is now at $8.28 (roughly where it was at pre-pandemic).
Sadly for me I had it on deck as my next pandemic-recovery bet in January, waffled for a few days, and then those nutjobs at WSB ruined my plans.
> It's not an unrealistic valuation. It wasn't completely insane like GME. AMC only went up to $20 for one day (near its Oct 2018 price) and is now at $8.28 (roughly where it was at pre-pandemic).
I beg to differ. AMC has nearly tripled their share count during the pandemic via ATM offerings. So, an $8 share price now is not the same as it was pre-pandemic. AMC's valuation now is 3x higher than pre-pandemic, which is indeed, insane, considering the state of their business.
How share price reacts depends on a few factors: the price of the ATM offering, whether the offering is viewed as a sign of distress, and how the cash is used (or not used).
If the ATM offering is priced at the current share price, and the company plans to just sit on the cash that it raises, the share price won't move much. Reason being: even though your shares are diluted, the company's total valuation increases (bc of the extra cash it just raised). Smaller piece of a larger pie == same value.
However, AMC's offering was far from this ideal scenario. Instead of sitting on the cash raised, they're burning through all the cash they're raising just to keep the lights on. So, shareholders experienced dilution without any increase in company value. In a sane market, you'd expect share price to decrease by the dilution percentage. The fact that this hasn't happened (combined with the fact Cinemark's share price is still half of its pre-pandemic levels) should worry anyone with a long position.
Right, but they've sold a ton of stock at highly inflated prices, used that to pay off debt, and are probably going to survive on continuing profits for at least a few years even if they're not going to exhibit much growth. They're now in a very solid position -- it's possible they're worth their valuation.
I’m long AMC sub $10 :p