The AMC Entertainment (NYSE: AMC) stock price has been under intense pressure as the Delta variant spreads. The stock has crashed by more than 50% from its all-time high, valuing the company at more than $19 billion.
AMC earnings ahead
The AMC stock price will be in focus as the company publishes its second-quarter earnings on Monday. Analysts expect that the firm did relatively well in the second quarter as the US economy reopened.
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According to SeekingAlpha, analysts expect that the company made revenue of more than $382 million in the second quarter. That will be almost double the $182 million that it made in the previous quarter. With costs rising, the company is expected to lose 96 cents per share.
Historically, AMC has beaten analysts revenue forecasts most of the time. It has done that in the past 15 consecutive quarters. Still, it has a long record of missing analysts forecasts on earnings.
The company had a strong quarter, helped by blockbuster movies like Black Widow and Fast & Furious. The company, together with other theatre firms like Cineworld and Cinemark, reported strong admissions.
However, there are key concerns that analysts will be focusing on. First, there is uncertainty about the future now that Covid-19 cases are rising in all states. Worse, the number of breakthrough cases is rising, pushing many vaccinated people to avoid non-essential activities like cinemas.
Second, there are issues about vaccine and mask mandates. With states implementing these mandates, there is a possibility that they will affect the industry.
Most importantly, there is the company’s balance sheet. While its debt load has risen, the company has taken advantage of its elevated stock price to raise capital to boost its balance sheet. The company likely has more than $1.75 billion in cash against a total debt of more than $5 billion. It also has $473 million in unpaid rent.
AMC stock price forecast
The 4H chart shows that the AMC stock price has struggled lately. It has dropped by more than 50% from its all-time high as its meme stock credentials have faded. It has also moved below the 25-day and 50-day moving averages and the 61.8% Fibonacci retracement level. It also seems like it has formed a double-bottom pattern whose neckline is at $46.67.
Therefore, the stock will likely rebound after its quarterly results. However, a drop below the support at $30 will open doors to more weakness.
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