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Speculation continues to mount about whether AMC Theatres will go bankrupt once the coronavirus pandemic settles down. One analyst isn’t so sure that it will.
What’s the news:
- Imperial Capital analyst David Miller wrote in a new investors note that he doesn’t think it’s time to sell stock in AMC right now because the company is sending mixed signals about bankruptcy, according to The Hollywood Reporter.
- He wrote: “Because we continue to think the likelihood of a Chapter 11 filing is still too close to call at this point, and there are so many mixed signals, we are maintaining our In-Line rating, though raising our price target to $4.00 from $3.00.”
- Miller said he’s unsure how AMC’s decision to ban Universal films — a result of Universal saying it would release films on digital release — might impact the company’s business as well, per The Hollywood Reporter.
Some context:
- In early April, an analyst told The Hollywood Reporter it’s likely AMC will face bankruptcy due to the coronavirus pandemic. MKM Partners analyst Eric Handler suggested people “sell” stock in AMC.
- Handller said: “Based on our view that theaters will be closed until at least August and our belief that AMC lacks the liquidity to stay afloat until that time, we expect the company will soon be faced with filing for bankruptcy. Further fueling our liquidity concerns is AMC’s decision to stop paying rents to landlords effective April.”
- Reports earlier in June said something similar. AMC Theatres said it has “substantial doubt” it can remain in business after the pandemic ends, as I wrote for the Deseret News.
- AMC said:“We believe we have the cash resources to reopen our theaters and resume our operations this summer or later. Our liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and our ability to generate revenues.”