The firm says the Leawood, Kan., company has benefited from the stock boost tied to the investors who participate in the subreddit WallStreetBets.
"We have no idea how long this will last, but firmly believe that in the long run the fundamentals will win out," analyst Alan Gould said.
"The fundamentals of the exhibition industry have declined, AMC’s competitive position, in our view, has not improved, its enterprise value has almost doubled while its closest competitor’s value has declined."
AMC shares at last check were down 2.3% to $9.96. They have more than quadrupled (up 350%) in 2021 to date even as it was forced to sell shares in recent months as COVID-19 lockdowns continued to hobble the movie industry.
"The industry should bounce back, and the 'Godzilla vs. Kong' results were encouraging, but we do not see the industry reaching prepandemic levels in the next few years," Gould said.
"Assuming its prepandemic value, which may be generous, implies little equity value barring successful financial engineering."
AMC Entertainment Chief Executive Adam Aron recently told TheStreet Founder Jim Cramer that his company was back and operating in normal conditions. He said AMC could look to raise even more cash and capitalize on the stock's Reddit-fueled rally, which added billions to its market value.
"Dilution is something we care about, but I will say we are formally asking approval from our shareholders to authorize another 500 million new shares that the company could issue if it wishes," Aron said.