Editor's note: In addition to an analyst saying he believed AMC Entertainment wouldn't go bankrupt, AMC's largest shareholder, Dalian Wanda Group, said that reports that AMC was considering filing for bankruptcy protection simply represented speculation and rumors, according to a March 15 Variety article. This news from Variety about Wanda Group likely also played a role in AMC stock rising on Wednesday.
What happened
Shares of movie-theater business AMC Entertainment (AMC) jumped on Wednesday, even as the market declined. The entertainment company's stock rose about 10.6% by the time the market closed. Yet the S&P 500 fell 2.2%.
AMC stock's rise comes even as an analyst lowered his price target for the stock. Bullishness for the company's shares on Wednesday may simply be due to the analyst noting that AMC has a chance of not going bankrupt.
Image source: Getty Images.
So what
Imperial Capital analyst David Miller downgraded AMC Entertainment stock from an outperform rating to an in-line rating. In addition, Miller gave the stock a 12-month price target of $2, down from $7 previously. The downgrade, of course, reflects the ongoing negative impact from COVID-19 on AMC's business as theaters remain closed.
While this is a significant downgrade, the analyst said he believes the company can still avoid bankruptcy. But he also admits there's no certainty that this will be the case given how fluid and unusual this situation is. The analyst's commentary comes shortly after the New York Post reported (citing an unnamed insider) that AMC was potentially exploring bankruptcy. The analyst's take on AMC possibly avoiding bankruptcy, therefore, may be good news to some investors.
Now what
The company had said in mid-March that it was closing all of its U.S. locations for six to 12 weeks. There's no news yet, however, as to when exactly the theaters will reopen.
"We will continue to monitor this situation very closely and look forward to the day we can again delight moviegoers nationwide by reopening AMC movie theatres in accordance with guidance from the CDC and local health authorities," said AMC CEO Adam Aaron in a March 17 press release about the theater closures.
