AMC: AMC Stock Up 20% in Two Days. Is There Enough Fuel to Rekindle a Recovery Rally?

Shares of the cinema chain marked their best gain since February after CEO Adam Aron said a bankruptcy is “inconceivable.”

Key Points:

• AMC shares rose 20% in two days.
• Company remains under crushing debt.
• Adam Aron downplays bankruptcy talks.
• AMC stock AMC is up a hefty 20% over the past two days as some modest appreciation has sparked hopes of a recovery rally. But is there enough potential to back it up and carry it even further? AMC has been battling severe headwinds ranging from poor management to a conspicuous share sale worth $250 million.
• All the while the cinema chain is crumbling under a $3 billion pile of debt and floating at a valuation of just $630 million. From that point of view, the two-day rise could be seen as a blip. Share prices merely rebounded from an all-time low of $2.47 to just under $3 a pop. What’s more, they’re down 51% so far this year.
• But all that could be a reason for someone to buy the dip before the next leg up (or another dip). Speaking at an interview, AMC CEO Adam Adon hyped up the audience by downplaying bankruptcy concerns. “Personally, I think it’s inconceivable that AMC would have to restructure … and file for Chapter 11.”