Meme stock mania is raising its volatile head again on Wall Street, following a cryptic post from Keith Gill, also known as Roaring Kitty, on X. Gill rose to fame during the extended meme-stock rally in 2021, which powered shares of companies such as GameStop (GME) and AMC (AMC) towards all-time highs.
According to a Bloomberg report, Gill “posted a mock-up of a Time magazine cover, featuring a blank computer screen with a media player that resembles YouTube. The image appears to be an edited version of the cover of the Dec. 25, 2006 issue of Time, when “You,” as in the American public, was named “Person of the Year.”
The post drove shares of legacy meme stocks such as GameStop and AMC higher. Moreover, shares of Unity Software (U), with the ticker “U,” gained more than 8% in intraday trading, while Clear Secure (YOU), which has the ticker “YOU,” pared earlier losses to end the day lower by 1%. It was Gill’s first post in almost three months. In June, the trader posted a cryptic image of a dog, driving prices of pet stocks such as Chewy (CHWY) and Petco Health (WOOF) higher.
Let’s see if AMC shares can continue to rally and stage a comeback over the next 12 months, following its Roaring Kitty boost.
Should You Buy AMC Stock at the Current Price?
AMC Entertainment shares, valued at a market cap of $1.95 billion, surged close to 6% yesterday. However, they are currently down nearly 8% in pre-market action, as investors react to news that AMC filed to sell up to 50 million shares. The stock now trades 99% below all-time highs.
Founded more than 100 years ago, AMC Entertainment is engaged in the theatrical exhibition business. It owns and operates around 10,000 screens in North America and Europe.
In recent years, AMC has wrestled with a range of issues, including the COVID-19 pandemic and competition from multiple streaming platforms, such as Netflix (NFLX), Disney (DIS), Amazon Prime (AMZN), and others.
Its sales fell from $5.02 billion in 2019 to $2.25 billion in 2020. While several other discretionary sub-sectors, such as traditional retail and travel, rebounded significantly once pandemic restrictions were relaxed, AMC’s revenue in the last 12 months totaled $4 billion, down 5.6% year over year.
Analysts tracking AMC stock expect its sales to rise to $5.14 billion in 2025 and $5.4 billion in 2026. However, the company’s negative profit margins, free cash flow, and sizeable balance sheet debt make it a high-risk investment at current multiples.
Wall Street expects AMC to report a free cash outflow of $353 million in 2024 and $130 million in 2025. Moreover, $4 billion in long-term debt and close to $400 million in annual interest expenses have weighed on AMC stock in 2024.
Is AMC Stock a Good Buy Right Now?
Of the seven analysts tracking AMC stock, four recommend “hold,” and three recommend “strong sell.” The average target price for AMC stock is $4.24, an 18% discount to Thursday's close.
The key drivers for any stock are its earnings growth and expansion of profit margins. In the last four quarters, AMC has reported a gross margin of 11.5%, down from 15% in 2023 and 18.8% in 2018. Moreover, its operating margin in the past year has fallen to 3%, compared to 8.6% in 2016.
It is evident that AMC is struggling to generate enough profits to sustain its operations and service its debt. With $527 million in cash, AMC will continue to have to raise additional capital, diluting existing shareholder wealth.
