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Is AMC Entertainment a Buy?

Hollywood is leaving AMC Entertainment (NYSE:AMC) behind. One movie studio after another is postponing the debut of its feature films until 2021, leaving little more than reruns for movie theaters to show.

Regal Theaters parent Cineworld chose to reclose all of its theaters for the foreseeable future as a result, but AMC is determined to stick it out. That’s creating financial problems for the theater operator, and its stock is approaching the lows it hit when the coronavirus pandemic first broke in March.

Investors need to decide whether AMC’s deeply discounted value makes it a screaming buy, or if it’s in real risk of going bankrupt.

Image source: Getty Images.

Bleak house

The situation certainly looks bleak. Even AMC just warned it was in danger of running out of cash by the end of the year and may attempt to raise capital by issuing more stock or debt. 

Yet after Bloomberg reported the theater chain was considering seeking the protection of bankruptcy courts, CEO Adam Aron said that reporting around that option was “wholly inaccurate” as the company is instead focused on raising new capital.

It’s important to note that Aron also said if AMC was not successful in its efforts, it would have to consider other options, but the company is not yet near that crossroads. With its stock trading around $3 per share, AMC has shed about 60% of its value this year.

Hunkering down

The company is in a bind that’s being exacerbated by its rival’s decision to close again. While movie studios keep pushing the release dates of their movies further and further out, by shutting down theaters and leaving few, if any, venues available for movie showings, studios also have little incentive to reverse course and release a film.

AMC said that as of Oct. 9, 83% of

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