The plot thickened for the vulnerable AMC (NYSE: AMC) stock price as it tumbled to its lowest level on record. It crashed by a whopping 15.60% on Monday, meaning that it has lost over 48.70% in value this year. Its valuation has crashed to $817 million, a big decline from its pandemic high of over $36 billion.

To put this into context, all AMC Entertainment shareholders have lost a fortune in the past few years. If you bought stock worth $10,000 in June 2021, the same shares would be worth less than $80 today. 

AMC Entertainment’s stock price crash is attributed to several important reasons. The most important is that the company boosted its debt substantially during the pandemic as it was forced to close its stores. As a result, as the chart below shows, its total debt surged to over $11 billion in 2020.

AMC has done a good job reducing its debt, which stands at about $9.14 billion. This debt reduction happened at the expense of shareholders, who have endured many cash raises. As a result, the number of outstanding shares has jumped from 6.25 million in 2019 to over 260 million today.

AMC total debt and outstanding shares

AMC continued its cash-raising process as it unveiled a new $250 million share sale. At the current valuation, it means that the stock sale will be worth a third of the company, which is a substantial figure.

Sadly, there are signs that AMC will continue diluting its shareholders in the next few years. Besides, the company is not expected to turn a profit in the next three financial years. Analysts expect that it will lose $1.6 and $0.81 per share in the next two financial years respectively. In 2023, its total loss stood at $396 million even after the success of Barbie and Oppenheimer.

Second, and in line with the first point, AMC faces substantial maturities in the next few years. While it will easily afford this year’s maturities, the hard part will happen in 2026 when the company has over $3 billion in maturities. It is hard to predict how it will raise these funds.

Third, fundamentally, the box office industry is going through a major slowdown. After last year’s success with Barbie and Oppenheimer, it is unclear whether this year’s releases will be that successful. Some of the most notable releases will be movies like Fast X, Indiana Jones, Transformers, The Marvels, and Avatar 3.

Even if these movies are highly successful, it is unclear whether they will help AMC Entertainment turn a profit sooner. For example, AMC made over $5 billion in revenue in 2019 before the pandemic but still lost over $149 million. 

AMC chart by TradingView

Turning to the weekly chart, we see that the AMC share price has been in a strong bearish trend in the past few months. It has constantly remained below the crucial support level at $10.7, its lowest swing on March 30th, November 2020, and January 2021. 

The stock has remained below all moving averages while the Average True Range (ATR) has crashed to a low of 1.79, its lowest point in years. Therefore, the outlook for the AMC stock is bearish as risks of more cash raises and bankruptcy continues. 

The next important catalyst for the AMC stock will be the next earnings, which are scheduled for May 9th of this year.

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