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Will This Be a Hollywood Ending to AMC Stock's 10-Day Losing Streak?

A lot of stocks are reeling these days, but few are experiencing the kind of drawdown that AMC Entertainment Holdings (NYSE: AMC) shareholders are feeling. The stock has closed lower for 10 consecutive trading days, shedding 30% of its value along the way.

The carnage gets worse if we look beyond the past two weeks. AMC's close of $15.94 on Wednesday is 78% below the all-time high it hit in early June of last year.

Every losing streak -- just like every run of positive trading days -- has to end eventually. It would be fitting and poetic if the skid ends on Thursday. AMC shareholders are already pretty fond of the Jan. 27 date, as the stock nearly quadrupled on that day last year. The $19.90 close that day didn't initially stick. The shares would be back in the mid-single digits a week later, but the meme stock revolution was born.

Image source: Getty Images.

Getting it right the next time

Hoping for the ultimate storybook ending is the kind of stuff that plays out on the silver screen at AMC's growing chain of multiplexes. AMC quadrupling again on the Jan. 27 anniversary would be outrageous, but it's not that easy anymore. AMC's share count has expanded nearly fivefold over its four previous quarters, giving it a much higher market cap than it had the first time around.

The rub here is that the news out of AMC has been generally positive outside of the lackluster performance of U.S. box office receipts in January. Reports earlier this week have AMC following through on CEO Adam Aron's New Year's resolution to refinance some of its high-interest rate debt.

MY NEW YEAR'S RESOLUTION FOR AMC. In 2020 and early 2021, AMC took on debt at high interest rates to survive. If we can, in 2022 I'd like to refinance some of our debt to reduce our interest expense, push out some debt maturities by several years and loosen covenants. 1 of 2 pic.twitter.com/f9Zgy8CYgh

— Adam Aron (@CEOAdam)

AMC has nearly $11 billion in total debt at this point, and a lot of it was secured when the theater chain was in dire straits. Replacing debt maturing in the next couple of years at lower rates and pushing out those repayment milestones makes sense. It's also brilliant timing if Aron and the rest of AMC can pull this off now before the Fed pushes rates higher.

The insider selling that resulted in Aron and AMC's CFO selling most of their vested shares was wrapped up earlier this month. It's one less argument for the bearish camp to make going forward, and it was just a bad look in general for a stock that has fallen sharply through the three months of programmed insider selling.

The headlines are likely to get kinder in the coming months. The debt refinancing coming to fruition could be a catalyst. It's also hard to imagine the weak two-year box office comparisons -- down 62% this past weekend -- getting any worse. There are a lot of big movies hitting the big screen exclusively in the coming months, and once the studio cadence is more than just one blockbuster every other month, we'll see the kind of audience numbers that bulls, exhibitors, and Hollywood have been waiting to see.

It's a bittersweet anniversary of the day that AMC shocked the world. Unless the stock is at least 25% higher by the time the closing bell rings, it will be the first time in a long time that it's down over the past year. Despite the wild stock chart, AMC has set itself apart as the top dog among movie theater stocks. Ending this 10-trading-day slide on this date would be theatrical, but kicking off a new winning streak would be the real Hollywood ending.

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns and recommends Twitter. The Motley Fool has a disclosure policy.


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