By Citi, a leading financial institution, has recently decreased its price target for AMC Entertainment Holdings Inc. (AMC) to $1.55 from $1.65. Despite being a popular meme stock, the movie theater chain continues to face challenges due to the ongoing global spread of COVID-19. As a result, many countries have enforced shutdowns, forcing movie theaters to close their doors.
In a note, Citi analyst Jason Bazinet highlighted the impact of the pandemic on the industry: “The global box office remains below pre-pandemic levels. Given the proliferation of multiple streaming services over the last several years, we see downside risk to the global box office going forward.”
AMC recently received approval for its revised plan, aiming to convert its AMC Preferred Equity (APE) units into common stock. Bazinet explained that their price target calculation took into account AMC’s expected debt reduction through equity issuance at the mid-point market value of the APE units and common stock. This approach implies a significant increase in AMC’s share count of over 100%.
On Friday, AMC shares experienced a slight decline of 0.4%, while the APE units saw a modest rise of 1.8%.
Despite these challenges, AMC Entertainment and other movie theater chains continue to adapt and seek innovative solutions to navigate through the uncertain times ahead.
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