Buying AMC Is Mere Speculation, Even After Record Thanksgiving

Going to the Movies?

You may find it difficult to get in. It had been so long since I had gone to the movies that I had no idea that you have to buy tickets and reserve seats ahead of time. In my mind, you could still walk up to the theater box office and buy tickets to see a movie in a half-empty theater.

Shows how out of touch I am. My wife was bored on Sunday, the final day of the Thanksgiving weekend. I was watching the New York Jets, but I have learned not to become emotionally attached to that crew. She had wanted me to take her to see the play "Wicked" on Broadway. I find actually attending Broadway plays to be about as exciting as watching grass grow or paint dry.

Call me uncultured. I don't care. I was an infantryman/hockey player/Wall Street guy in my life. Of course, I'm a Neanderthal. Anyway, now that "Wicked" is a motion picture, I thought I could do something nice and take her to the movies. No dice. We are up in New York for the holidays. I have three nice-sized, multi-screen movie houses near my Long Island home. All three were booked solid all day for Wicked unless we were willing to sit apart. We were not.

So, I offered my wife "Moana 2," the Disney DIS film. We had seen the first Moana on Disney+ and thought it was pretty good. She okayed "Moana 2." Still, no dice. Booked all day long at all three movie houses. What the heck? I thought movies were done the old-fashioned way, had gone the way of blacksmiths and floor traders who flourished in the old open outcry auction trading model. Apparently not. Lesson learned. If one wants to take one's wife to a movie on the weekend, buy the tickets several days in advance.

They Poured In

On Monday morning, AMC Entertainment AMC announced that the firm had set several records during what it calls the "five-day Thanksgiving holiday period." All told, a rough 8.8 million individual movie tickets were purchased at AMC theaters in the U.S. and at Odeon Cinemas internationally from Wednesday through Sunday. The five-day period was the busiest Thanksgiving holiday in the history of AMC, which goes back 104 years. Those records were all set in 2018 by the way, so AMC is now breaking pre-COVID records. Friday was also the busiest Black Friday in AMC's history.

AMC will not report the firm's fourth quarter earnings until late February. Wall Street is currently looking for an adjusted EPS: $-0.17 on revenue of $1.3 billion. This would compare to an adjusted EPS of $-0.54 for the year-ago comp on revenue growth of almost 18%. The firm last posted a profitable (adjusted) quarter back in Q2 2023 and for another profitable quarter, we have to go back to Q4 2019.

The fundamentals have been a little tough. Operating cash flow over the past 12 months as of September was $-332.2 million, on top of which the firm spent $227.9 million on capital expenditures. The balance sheet is sort of a mess. The firm at that time had current assets of $789.1 million, which included a cash position of $527.4 million. However, current liabilities added up to $1.579 billion, which included $95.6 million in shorter-term debt and $$385.1 million in unearned revenue.

Even after adjusting for that unearned revenue, which is not a true financial obligation, the firm's current ratio came to an ugly looking 0.66. Total assets amounted to $8.324 billion, including goodwill and intangibles of $2.499 billion. The firm also had total liabilities of $10.009 billion, which included long-term debt of $4.048 billion.

That Balance Sheet

For the most part, it makes AMC Entertainment uninvestable. Still, perhaps the most bullish looking single item among this firm's statistics is the short interest. A rough 13.29% of the entire float is still held in short positions. Now, that's not as bad (or good) as we have seen in the past or in other stocks, but as a quasi-rule, I try not to bet on stocks bearing lousy fundamentals, and I do not be against stocks once more than 8% of the float is already short.

My Thoughts?

I stay away from AMC for now. The crowds at theaters? That's a start. Let's see how it builds. I'd rather be late to this party than end up speculating, which is all taking an equity position in AMC is at this point. Still.

Day Late and a Dollar Short

On Monday morning, four-star rated (by TipRanks) analyst Reginald Smith of JP Morgan reiterated his "neutral" rating on former core "Stocks Under $10" portfolio holding and still key name SoFi Technologies SOFI, while increasing his target price from $9 to $16. The stock closed at $16.41 on Friday, which was the stock's ninth green candle session in the last 10. Last week, the five-star rated analyst John Hecht of Jefferies reiterated his "Buy" rating while increasing his target price to $19 from $13.

Readers will recall that almost two weeks ago, we increased our target price from $13.50 to $19, which at the time, I believe, was the high target price on Wall Street. We still intend to add down to the stock's 50-day SMA, however, readers should be cognizant that the 50-day simple moving average has moved north to a current $11.10 from the $10.30 where it was the day of that article. We'll still place our panic point at a loss of the 200-day SMA, which is currently $8.20.

At the time of publication, Guilfoyle was long SOFI equity.