AMC Entertainment’s stock (NYSE 🙂 has seen a lot of amazing runs in the past year. This meme stock surged multiple times, reaching the $20 mark earlier in the year before plummeting to its lowest level.

AMC stock rose to $72.62 per shares in June. That’s a huge jump from the mid-May levels when it traded below $10.

Retail investors bet on continuing short squeezes for this stock to drive these momentum-driven movements. AMC stock has been a popular choice for investors because it is so easy to squeeze short.

Is this a continuation of the rally? Is AMC stock being displaced by smaller-cap short squeeze play stocks?

AMC stock remains my bearish position. I think the stock’s current valuation is far too detached from its core fundamentals. Let’s now see what experts have to say about this stock. (See AMC Entertainment stock charts on TipRanks)

What’s Behind Recent Surges in AMC Stock?

AMC’s violently moving stock price has been driven by a couple of key factors.

AMC’s fundamentals need to improve. The excitement surrounding cinema stocks is being renewed by recent box-office successes like Shang-Chi.

AMC stock is seeing a boost due to consumers’ pent up demand for entertainment.

This thesis could be scuttled by rising cases and the prevalence of COVID-19 variants in the short term. But, long-term thinkers should be open to the possibility of a significant increase in AMC revenue and possibly gross profit.

AMC’s cash flow has been a problem despite some very profitable theater releases. It’s a company with limited capacity in its locations. It may be a while before it reaches full capacity.

AMC stock has also been aided by capital inflows that have led to other meme stocks. AMC, which is currently the number one meme stock in the world according to many GameStop (NYSE) investors this summer, holds the first place.

If AMC stock continues to attract significant retail investor interest, everything is possible.

Finances are better, but need improvement

AMC stock may have the potential to go higher, but its financial position appears to be dangerously fragile. This company’s most recent quarterly reports reveal AMC’s earnings surpassed analyst estimates, while losses were lower than expected. Despite this, debt remains a major problem for the company. 

The pandemic ravaged the film theater sector. AMC was actually on the brink of collapse towards the end 2020. This has been helped by stock issuances in previous meme rallies. Investors looking for new capital in AMC stock will find it difficult to understand the investment thesis due to the impact these offerings had on their existing shareholders.

Wall Street’s Take

According to TipRanks analyst ratings consensus, AMC Entertainment ranks as a Hold. There are 3 Hold recommendations, 1 Sell recommendation and 2 Sell recommendations out of 4 analyst ratings.

The average AMC Entertainment price target is $11.75. The price target for analysts is $11.75, with a range of prices from $7.50 to $16.

The Bottom Line

AMC’s ticket sales are still quite below pre-pandemic levels. Although many investors expect this to change, AMC stock remains a risky and high-reward investment.

People with long-term capital preservation goals and a reliable investment time frame may wish to avoid this stock.

Investors who are looking for immediate gains and aggressive traders may consider this stock. Volatility is the best friend of traders.

Disclosure: Chris MacDonald had no position in the securities listed in this article at the time it was published.

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