Is Meme Rally Over, or Just Beginning? By TipRanks

AMC Entertainment (NYSE:) stock has been on a number of incredible runs this year. Indeed, this meme stock has surged more than once, going on a rally to the $20 level earlier this year, before falling back to earth.

More recently, AMC stock surged to as high as $72.62 per share in June, a significant jump over mid-May levels, which saw this stock trade at sub-$10 per share.

These momentum-driven moves have mainly been driving by incredible options activity among retail investors betting on continued short squeezes with this stock. While some may argue as to whether or not AMC has actually squeezed in the fact, due to the reality that on each squeeze attempt short positions actually grew, this is a stock that has remained on the radar for so many investors this year because of this reason alone.

Will this rally continue? Or has AMC stock finally been pushed aside in favor of other, smaller cap short squeeze plays?

I remain bearish on AMC stock currently, as I believe this stock’s valuation has become completely detached from its fundamentals. That being said, let’s dive into what the experts think on this stock. (See AMC Entertainment stock charts on TipRanks)

What’s Behind Recent Surges in AMC Stock?

AMC’s violently moving stock price has been driven by a couple of key factors.

First, there is a fundamental argument to be made about AMC’s fundamentals improving. Recent box-office blowouts including Shang-Chi are renewing the fervor around cinema stocks.

Given the pent-up demand for entertainment, AMC stock has received a nice shot in the arm from consumers.

Of course, rising case counts and prevalence of COVID-19 variants could derail this thesis in the near term. However, those thinking long term have to like the potential for a meaningful rally in AMC’s revenue, and potentially gross profit.

That said, it’s important to note that despite very successful theater releases of late, AMC has continued to bleed cash. This is a company that’s nowhere near full capacity across its portfolio of locations, and getting to full capacity may take some time.

The second important catalyst for AMC stock of late has been capital inflows into various meme stocks. AMC is perhaps the leading meme stock right now, taking top spot in the minds of many retail investors from GameStop (NYSE:) this summer.

Should considerable retail investor interest remain with AMC stock, anything’s possible.

Financials Better, But Need Improvement

Although AMC stock has shown the potential to shoot higher in parabolic fashion, the company financials appear to remain in a dangerously precarious position. This company’s most recent quarterly reports reveal AMC’s earnings surpassed analyst estimates, while losses were lower than expected. That being said, the company remains highly burdened with debt. 

The movie theater industry was one of the worst affected sectors during the pandemic. Indeed, AMC was almost on…