(Bloomberg) – AMC Entertainment Holdings Inc.’s Reddit-powered rally has hit about 3,000% so far this year as retailers ignore the company’s financial troubles and continue to buy heavily short stocks.
The cinema chain’s shares more than doubled on Wednesday – which contributed to the 23% rise on Tuesday – after it announced a program called AMC Investor Connect, which will reward retail investors with goodies like special screenings and free popcorn.
The surge has surpassed 400% in the past two weeks alone, propelling AMC’s share price to a record high. Its market cap has also surged to $ 33 billion, outperforming other so-called meme stocks. That includes GameStop Corp., which is now around $ 20 billion after hitting a high of $ 25 billion in January.
While AMC’s dizzying run has rewarded investors who bought their way into the meme stock craze, it hasn’t changed the company’s earnings outlook. With the movie chain still suffering from the pandemic, analysts have steadily slashed estimates for earnings before interest, taxes, depreciation and amortization. They now expect that on that basis, AMC will lose nearly $ 100 million over the next 12 months.
AMC declined to comment.
Adding to the troubling fundamental picture is AMC’s growing debt burden. The company nearly tripled its long-term debt mountain from less than $ 2 billion in 2016 to $ 5.4 billion in the first three months of this year.
Despite the wild rally this year, analysts have relatively kept their price targets in check. AMC’s average 12-month target price has more than doubled since January to $ 5.11 but is still more than 90% below current levels.
–With assistance from Kelly Gilblom.