Should you buy AMC stock? (May 2024)

Published first at https://www.3minutebreakdowns.com AMC stock analysis. Ticker: AMC AMC stock soared 300% last week after Roaring Kitty reignited meme stocks. Shares have dropped back but are still up 36% on the month. At the latest price, AMC has a market cap of just under 1.5 billion. With 632 million of cash and 4.5 billion of long term debt, the enterprise value is 5.4 billion. AMC is still the largest movie theater owner in the world with revenues of 4.8 billion over the last 12 months. 2023 was a good year for AMC with revenue growing 23% and adjusted ebitda has climbed to almost 400 million. However, even under $5 a share there are some big problems investing in AMC. The first is debt. AMC finished the first quarter with net debt of $3.9 billion which gives it a leverage ratio of over 10 times adjusted ebitda. To put that into context, a leverage ratio over six usually signals a company in significant distress. And AMC’s figure doesn’t even include the impact of operating lease liabilities which amounts to another 4.4 billion. In theory, AMC could still be worth something if it has a path to growth but that highlights the second issue with AMC. Sales are still below where they were before the pandemic. The problem is AMC’s fixed-cost model. AMC needs a certain number of moviegoers coming through the door before it starts to earn a profit. Once it hits that number, the business becomes quickly profitable. But people simply aren’t going to the movies like they used to. #amcstock #investing #stockmarket #3mb