In the year 2021, the shares of AMC Entertainment (NYSE:AMC) saw phenomenal success. This sparked a trading frenzy among investors who urged each other to purchase and hold AMC shares. AMC’s theater chain operations, however, were severely dented by the effects of the pandemic and were unable to run normally for most of the year. The AMC stock forecast for 2022 doesn’t look very bullish. As per expert predictions, the company would be unable to replicate the same YoY growth rate it achieved in 2021. Consequently, experts are urging investors to separate themselves from the stock in 2022. Before deep diving into the reasons behind that, let us first give you an overview of the company. 

About the Company

AMC Entertainment Holdings, Inc. (NYSE:AMC) is involved in the theater exhibition industry via its subsidiaries. The company has roughly 1000 theaters to go with 10,700 screens in the United States & the rest of the world, according to the most recent available data. This Kansas-based corporation was established in 1920.

Find out more information on AMC Entertainment Holdings (NYSE:AMC)

Why are expert predictions in favor of the AMC stock being sold in 2022? 

•  The stock is overpriced 

Despite plunging about 60% from 52-week highs, AMC’s stock is up nearly 1,300% for the year because of the short squeeze price increase. The rise was unrelated to the health of the business, considering that AMC’s theater attendance remained flat year-on-year in the nine months ending September 30, 2021. The increase was actually driven by a group of retail traders who kept buying shares.

The AMC stock forecast indicates that it is highly unlikely that the company will make a profit after losing $1.2 billion in nine months of 2021. The corporation was already struggling to make a profit in the pre-pandemic period, and now with the Omicron variant continuing to pose a major threat, there seem to be even tougher times ahead. Some AMC managers selling their shares is also a testament to the fact that the stock is quite expensive.

• The company’s balance sheet doesn’t look that great

Although all of AMC’s theatres were shuttered due to the pandemic, management performed a great job of raising money to get the firm through until it could reopen. However, the actions taken to generate money have placed AMC’s balance sheet in jeopardy. There is $5.4 billion in long-term debt that costs the corporation millions of dollars in interest each year.

When the time comes to pay the principal sums, AMC is unlikely to have the funds available. It will try to get a loan to pay off the debt. Toward the conclusion of the third quarter of 2021, AMC had $1.6 billion in the bank. The number is expected to continue to decrease in the near future. 

•  The industry is running out of steam

Even before COVID-19, the movie theater sector was on a decline. Stakeholders were sluggish to adjust to shifting consumer tastes. Movie theaters have had less innovation than any other sector in the previous two decades.

Although not much was done to uplift the average moviegoer’s experience, the cost of movie going rose dramatically. The average movie ticket in the US went from $5.66 in 2001 to $9.37 in 2020, excluding 2021 increases.

Consequently, movie ticket sales have continuously declined from 1.48 billion in 2001 to 1.24 billion in 2019,. Unless the movie theater sector improves the consumer value offer, the downward trend will continue for certain.

Final word:

The AMC stock forecast indicates that the corporation’s short and long-term business prospects appear to be very bleak. The company’s financial situation is in jeopardy. According to expert predictions, it will be difficult for AMC to defend the high stock price with higher profits, since it is now expensive. Prudent investors will steer clear of AMC stock, and if you already own it, now is a great moment to get rid of your holdings.

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