Image Source: Unsplash
 

• AMC share price has been in a strong bearish trend in the past few months.
• The company faces numerous headwinds in the coming months.
• Technical analysis points to another 65% dip.

AMC (NYSE: AMC) stock price has been a trainwreck in the past few years. After peaking at  $44 at the height of the meme stock frenzy, the shares have plunged to $4 and are sitting at their lowest level since January 2021. There are elevated risks that the storeyed company could file for bankruptcy in the coming years.
 

AMC has become a trainwreck

AMC share price sell-off gained steam as the company continued making headlines. The most recent AMC news came from a US courtroom where a judge approved a $129 million payment to shareholders. The company will now execute a 1 to 10 reverse split stock and convert APE into AMC. APE shareholders have sued AMC against this conversion.

The impact of all this is that AMC investors will go through dilution as the number of outstanding shares rises to 169 million. Most importantly, the firm will have the option of diluting its shareholders more by issuing 369 million new shares.

The biggest challenge for AMC is that its debt levels remain elevated and there are some maturities around the corner. AMC’s long-term debt has dropped from $5.69 billion in 2020 to $4.7 billion. It used the meme coin frenzy to raise capital and reduce its debt load.

The challenge is that AMC’s balance sheet has just $450 million in cash, meaning it can handle its payouts in the next two years. The most important debt maturity will come in 2026 when the firm will need to pay $3.1 billion.

The challenge for AMC is that its business is facing significant headwinds, especially the ongoing writers’ strike. This strike will impact the number of movies that are released in 2024. 

Still, there are some positives for the company. For one, its revenue is still growing as it reached $1.34 billion in the last quarter. It has also turned profitable, generating over $8 million in net profit.
 

AMC stock price forecast

(Click on image to enlarge)

The weekly chart shows that the AMC share price has been in a strong bearish trend in the past few years. The shares managed to flip the important support level at $3.84 into a resistance. This price was the lowest level in January, April, and June of this year.

The stock has plunged below the 50-day and 100-day moving averages. Therefore, the shares will likely continue falling in the near term, with the next support to watch will be at $1.13, the lowest level in January 2021. This price is about 60% below the current level.

More By This Author:

Bitcoin’s Inevitable Return To Volatility
Lockheed And Northrop Win $1.5 Billion Worth Of Pentagon Contracts
Gold Price Forecast As China, Saudi Arabia Dump U.S. Treasuries