AMC Entertainment Holdings, Inc.

Bullish 5-Year Outlook



Question From AMC Short Seller: John Hempton

1.       I really would like to understand why you are so confident in AMC.

2.       I am short - but I have been wrong often enough to always take seriously the other side of the trade.

3.       If you hang around in financial markets long enough, you will learn (like I have) the pain of being wrong.

Avi Harkishun Response:


Thank you for reaching out. Those are all great questions from you. I do hope we can have a constructive conversation. This is a projected fundamental analysis of AMC as to where I see the company heading in the future. I will refrain from discussing much of the company’s detailed financials, such as projected and discounted cashflows, etc., which are major argument points for short sellers and financial analysts. When it comes to AMC’s stock price, we cannot ignore the issue of market manipulation on AMC and any theories of synthetic shares, AMC Squeezing, etc. Though that is a different conversation, I would be more than happy to discuss it another time or direct you to other investors who have done more extensive research in that area of AMC if you wish to learn more about it. In the grand scheme of things, lots of the short interest data, dark pool trading, etc., should not be ignored, especially if you are short AMC. It is no secret one of the main reasons we, retail investors are holding AMC stock and will not sell is because of the potential short squeeze and advocating for a fair and transparent financial market.


Short Sellers Arguments against AMC Entertainment Holdings, Inc.

The argument I see most of the time is analysts valuing AMC on traditional fundamental valuation metrics whether it is using the CAPM model, etc. The valuations and arguments being made are AMC has huge debts, negative cash flow, and a negative debt-to-equity ratio. Though that is true presently, that short thesis will be dead in the coming future, which I believe to be sooner than later. In addition, these analysts talked about movie theaters being a declining business and will be taken over by online streaming. The assumption is that AMC will never get out of debt and will continue to burn cash. All these variables used to value AMC indicate that the company is trading at multiples of its fundamental value and that the business with remain the same movie theater company as it has been in the past.

I understand why short sellers shorted AMC in the past based on declining fundamental value and the impact COVID-19 had on the business. However, the assumption that AMC will remain in debt, continue to burn cash, the business model will remain the same, and perhaps go into bankruptcy will be a fatal mistake by short sellers or anyone betting against AMC Theatre. At this time, Bankruptcy is off the table for AMC Theatre, and we will witness improving fundamentals from here on going forward.

If I am short AMC and sitting on huge profits, I would begin to take profits now or in other words, trim my position for risk management purposes and at least hedge any remaining open short positions. I do not hold any short positions in AMC or intend to at all. I am long the stock and do see a major upside starting Q4 2022, which will be in 2023. However, I could be wrong about the timing and that upside can start in 2022, but I do not think it will be later than 2023.


Why I am long AMC Entertainment Holdings, Inc. and confident we will see great upside in the future.

-AMC's business model is changing. In five years timeframe, the company will not be the same movie theatre company as we know it. I envision drastic positive changes in the company’s business model and additional revenue-generating lines of business.

-People have a newfound love for watching movies on the big screen. It is an experience people will fight to keep, which we are seeing happening now. The demand for movie theatres will continue to grow, especially with blockbuster films.

-Movie production companies realized during the Pandemic it is much more profitable to release their movies in theatres first than their streaming services. Production companies experimented with their business model of releasing movies on their streaming platform compared to the movie theatre and concluded it is much more profitable to take the route of releasing their films on the big screen.  Production companies will continue to create movies for the big screen because they are incentivized to do so. It will be a win for both movie production companies and movie theatres – in this case, I imagine AMC Theatre will benefit the most being the most dominant movie theatre chain based on market share. I also imagine AMC Theatre will continue to grow and gain additional market share as other movie theatre chains shut down or file for bankruptcy due to the impact of COVID-19.

-AMC has agreements with movie production companies to keep movies in their theatre for a 45-day window. This agreement is made with flexibility where if a movie is performing well that window can be extended, conversely if the movie is performing poorly that window time frame can be shortened. That flexibility of control is important. AMC Theatre has great relationships with production companies and as mentioned above, it is more profitable for production companies to release their movies in theatres, so they will do what they can to generate more revenue if that route is distributing their films in movie theatres first. AMC is also in conversation with streaming services to release some of their movies exclusively at their theatres. I do believe Streaming services, like Netflix and Prime will experiment with this idea if it is a win for both parties.

-AMC is exploring ways to change its business model to create sustainable sources of revenue with AMC Stubs membership, etc. I am an A-List member ( I believe AMC Stubs membership, especially A-List will gain traction over time as the business change and the company figures out additional ways to entice customers to be paid subscribers of its AMC stubs membership. As movies get more expensive to watch over time, I do believe active moviegoers will turn to a subscription base service like AMC A-List. This will generate millions of dollars a month for AMC. AMC Stubs will be a big revenue-generating service for AMC Entertainment Holdings, Inc. as the company creates additional services for its Stubs membership. AMC is creating an ecosystem for entertainment and will expand with other horizontal and vertical M&As.

-Traditional movies will not be the only thing showing in theatres. AMC will expand to sports programs, gaming, metaverse, movie production, and much more that we cannot envision yet. Adam Aron briefly spoke about his long-term strategy and direction of AMC. These are just a few ways AMC will change the movie theatre aspect of the business. However, the biggest changes will occur outside of AMC Theatre as they create other lines of business to diversify their business portfolio so 99% of their revenue is not derived from AMC Theatre. CEO Adam Aron has already made it clear this is the long-term strategy for AMC Entertainment Holding, Inc. He stated many times AMC Theatre will no longer be the same company stakeholders once knew. AMC Entertainment Holdings, Inc. will no longer be just a movie theatre company that is only recognized by AMC Theatre.

-AMC Theatre’s new line of business, “AMC Perfectly Popcorn” will be sold in stores. The popcorn industry is a multibillion-dollar industry. This new LOB will generate additional revenue for AMC and may be a major source of their revenue. The company recently introduced the “AMC Theatres MegaBag” ( It's 3x bigger than the large popcorn sold at the movie theatre concession stand. The MegaBag is packaged for carryout.

-AMC Theatre concession purchases continue to grow. The demand is increasing each quarter as the profit margin also increases. This demand will continue. We will witness increased demand and revenue from each service and product the company sells. I am expecting AMC’s operating margin to return to an average of 5-7% within the next 2-3 years and 7-10% within the next 3-5 years. It is realistic to project a 15% operating margin over the next 5-10 years as the profit margin for goods sold has creased and so does the demand. Check out the historical operating margin data for AMC from 2013-2022. This website is a great research tool for long-term investors.

-AMC is creating its own branded credit card. With four million retail investors holding the company stock and loving AMC Theatre, I can only imagine the demand for that credit card when it is available for customers to apply. The benefits and rewards for both customers and AMC Theatre are yet to be disclosed.

-AMC is experimenting with ideas of how they can generate revenue with NFTs and exploring the idea of creating their cryptocurrency. I do think all these ideas will be implemented in time.  

-I understand the debt AMC carries and will need cash to grow. By Q4 2022 or Q1 2023 AMC will become net positive cash flow. The 2023 box office is projected to be twice as big as 2022. With those numbers, there is no doubt the company will no longer burn cash - it will begin to generate a profit, well above its breakeven point and surpass 2019 pre-pandemic levels of financials. AMC needs to generate $6 billion in annual gross revenue to remain profitable and grow. In 2023 AMC is projected to generate the revenue needed to become a profitable business.

-AMC Theatre will use APE Preferred Stock to raise cash, so they can pay down and also refinance high-interest debt. By doing so the company will save hundreds of millions a year on repayments of their high-interest loans (principal and interest). The increased cash flow and strong balance sheet will give AMC Theatre the flexibility and edge to take bolder moves to grow the company. 

-The dilution of APE will strengthen AMC's balance sheet tremendously. It will give them the cash needed to explore other profitable lines of business or business ventures through M&A to diversify their business portfolio.

-Bankruptcy is off the table for AMC Entertainment Holdings, Inc. Short sellers or those betting against AMC Theatre still hold onto the notion that AMC may go bankrupt. That notion is dead and soon every short thesis will be as well.

-The company that short sellers shorted will no longer be the same company in 5 years and the foreseeable future. I expect to see major positive changes with AMC starting in 2023. Retail investors are buying and holding the stock. It is a majority retail investor-owned company. This is important because retail investors keep on accumulating the stock and will not sell until short sellers close out their positions. Looking at the short interest data AMC will have a short squeeze in due time when major short sellers begin to close their positions. It is just a matter of time. The demand for AMC stock is high. Despite the stock price dropping and FUD (Fear Uncertainty and Doubt) going around that the dilution of APE Preferred Stock is a bad thing, it certainly is not. It will be a win for the company and investors that are long the stock. Below are the short interest data for both AMC and APE as of October 10th, 2022, according to Fintel. This data along with other, technical, fundamental, and economic data shows indicates that once short sellers begin to close out their positions the upward move in both AMC and APE will be very violent.


$AMC Short Interest Data

$APE Short Interest Data:

Shares - 100,011,800

Days to Cover - 3.89

Short Interest % Float - 19.41%

Shares - 44,021,101

Days to Cover – 3.10

Short Interest % Float - 8.54%

Here is a summary of my 5-year outlook for $AMC Entertainment Holdings, Inc.

-Debt Free or positive debt-to-equity ratio.

-Net positive cash flow.

-Diversified business LOBs.

-Growing and changing business model.

-Much stronger fundamentals.

-M&A will let AMC remain a dominant force in the movie theater industry and expand towards being a leader in the entertainment industry. These M&As will also diversify AMC's business portfolio beyond a movie their company. One such company that AMC invested in is Hycroft Mining Holding Corporation (Ticker Symbol: HYMC). This investment has a long-term horizon, but I believe it will be profitable in the future as Hycroft Mining continues its exploration. AMC Entertainment Holdings, Inc. is taking a conservative long-term strategy for growing and changing the business. With the cash raised from APE and becoming a profitable business, AMC will speed up its innovation and growth. They will be able to take bolder action to grow the business.

-Fundamental improvement over time will force short sellers to close out their short positions if the current economic climate does not sooner with rising interest rates and bear market causing short sellers on margin to put up additional collateral. If the collateral being used right now is their long positions, well in a bear market I expect those that cannot meet the collateral requirements will be forced out of their long positions and also short positions. What makes AMC a dangerous company to hold a short position in is that there is no telling when the price of the stock can have a volatile and explosive move upwards. I know this move will happen and AMC will trade above $72 or way into the hundreds when that time comes. It is not a matter of IF, but WHEN. Short sellers will have to close out their positions and that will create a volatile move up because of AMC investors buying and holding the stock. The days to cover all short positions in AMC is 3.89 as I mentioned above. That is quite high and will create a short squeeze. The cost to borrow on AMC will continue to rise. There are so many factors against short sellers holding onto their positions. I do imagine the first ones to close out their short positions will live to invest another day. The stubborn ones may not be so lucky if they are trapped in AMC’s short squeeze.

-I do not want to get into my observation and data on AMC trading and how it is being manipulated or the theory of synthetics, etc. However, if we are to consider all the research being done by some of the most brilliant retail investors and even professionals in the financial industry there is just no telling how high the price of AMC will rise once short sellers rush to close out their position in time due to improved fundamentals and other factors. If I was short AMC I would not want to be stuck in that situation. I am confident this will be the outcome of AMC stock. It cost money to short a stock with interest being paid to borrow the stock. Short sellers cannot hold onto their short positions forever, especially for a company that is experiencing improving fundamentals that will have sustained growth and profitability.


Do I think AMC will go through a short squeeze?

I do think AMC will have a short squeeze and it might be something like what happened with Tesla. It's not a matter of IF, it's a matter of WHEN. If you are great at timing the bottom of AMC, then awesome but remember the risk of being short a stock is unlimited, and you certainly do not want to be holding your entire short position during the next major run-up like the stock had when it touched $72 – that may very well be the point of when the short squeeze will be triggered. The stock price went from $2.27 in April 2020 to $72 in June 2021 when the company's fundamentals were completely destroyed, bankruptcy was a possibility, & its future was uncertain. What is even more frighting for those short AMC is that on April 9th AMC was trading at $9.42 and by June 21st AMC was trading at $72.62. All that price increase happened due to many factors such as short interest, FTDs, etc. However, what really took place for the price to increase by 670% is still a mystery, like when the buy button was removed on January 28th, 2021.

What we know for sure is that the price increase for AMC was not due to the company’s fundamentals. Shortly after the stock was halted and adjusted back to trade on fundamentals and manipulated to push back down to trade lower to prevent a continued squeeze & margin call. The pattern of halting AMC stock to kill the momentum and drive the price down is something AMC investors are quite familiar with. However, the point is, if AMC can increase by 670% in a matter of three months but takes one year and four months to slowly drop the price back to the same level as the first squeeze happened tells me much about the demand for the stock and the difficulty of suppressing the stock price. I can only imagine when fundamentals are back to the 2019 level and surpass it what will happen when short sellers are forced to close out their positions.


When do I think we might see these big moves in the stock?

- I think it will be in 2023 which will be triggered by AMC's fundamental improvements, short interest data, and other economic factors. I do believe many short sellers will be blind-sided and get caught off guard. I do believe AMC is highly manipulated and the price of the stock is suppressed using various means of market mechanics, etc. as I have posted on my Twitter account. Four of the deadliest mechanics of our financial markets, but not limited to just these, that lack regulation which I believe are being used to manipulate AMC stock, and many other stocks are:

  1. Algorithmic trading.
  2. High-Frequency trading.
  3. Dark pool (OTC Market); and
  4. Failure-to-Deliver (FTD).



John, you make whatever decision you think is right for you based on your analysis and research. This is just my opinion and not meant to serve as financial advice. These are just some of the reasons why I am holding AMC and I am so confident in the stock moving upward. Traditional fundamental valuation will be misleading for AMC until the short squeeze. After that, it might make more sense to use those valuation methods as things become a bit more normal for the stock. As of now, this is a short-squeeze stock, and analyzing the stock price will require different ways of looking at the stock and valuing it.

I have faith in CEO Adam Aron. I can see what he is trying to do to improve AMC as a business and I do believe he will accomplish it. I think AMC did well by embracing its retail investors and listening to them, especially their ideas. It was great leadership by CEO Adam Aron and AMC’s management. Even though I do not agree with everything Adam Aron does, he does have a good reputation for turning around struggling businesses and he is a man I would not want to bet against. I like to invest in companies with a great future and talented leadership team that others may not be able to see yet – I do believe AMC is one of those companies that has been written off by Wallstreet as Tesla and Amazon once were but will one day soon prove Wallstreet wrong and retail investors will stand to gain much. AMC Theatre will be a story that can be compared to that of a Pheonix.

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