AMC stock price has stabilized in the past few weeks as the company published strong financial results. It was trading at $2.95, up by 20% from its lowest level this year. This article explains why the AMC share price could continue rising this year.
AMC business is doing relatively well
One of the top catalysts for the AMC stock price is that its business is doing well, as evidenced by the recent financial results.
The results revealed that its revenue rose to $1.39 billion, up by over 35% from what it made in the same period last year. This growth was attributed to the highly successful movies, including Lilo & Stitch, a Minecraft Movie, Jurassic World, Superman, F1: The Movie, Mission Impossible, and Captain America.
This trend could continue as more movies are set to be released in the current and fourth quarter. Some of the most notable ones are Now You See Me: Now You Don’t, Wicked, Moana, Zootopia, and Avatar.
Second, the company is working towards achieving profitability, something that many analysts believed would not happen any time soon. The net loss in the last quarter was $4.7 million, a big improvement from the $32.8 million loss it made last year.
Most notably, the adjusted EBITDA jumped to a whopping $189.2 million from $32.8 million in the second quarter of last year. Adam Aron, the CEO, mentioned this in his statement, saying:
“That was $150.7 million more Adjusted EBITDA than was posted in last year’s second quarter. It is a simple reality, and hopefully a harbinger of things to come that as AMC’s revenues grow, our EBITDA can soar.”
Third, the lingering risk that the company would file for bankruptcy has disappeared as Aron and his team have solved the near-term risks. The company received $240 million in debt in July, cash that came with an equitization of at least $143 million in debt.
It has now settled its maturities for the year by pushing them 2029, removing any near-term risks. Not thinking of its debt allows the company to continue executing the turnaround strategy.
Read more: Here’s why AMC stock price may jump by at least 25% this year
Most importantly, the company is now working on increasing its revenue sources. One of these approaches is through marketing, where it plays advertisements before movies, a move that Adam Aron believes will generate tens of millions of dollars in annual revenue.
The company is also focusing on premium services, where it charges more money compared to the regular auditoriums.
Another catalyst for the AMC stock price is that it is still a highly shorted company. It has a short interest of 9%, making it vulnerable to a short squeeze.
AMC stock price technical analysis
The other bullish catalyst for the AMC share price is that it has formed a highly bullish triple-bottom pattern on the daily chart. It struggled to move below this support several times since April this year. This pattern has a neckline of at $4.
The stock has also formed a bullish divergence pattern as the Relative Strength Index (RSI) and the MACD have pointed upwards. Therefore, it is likely that the AMC share price will rebound by 40% to the triple-bottom’s neckline at $4.
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