AMC Entertainment Stock Forecast: AMC gains ground after Wednesday's 7% sell-off

AMC Entertainment (AMC) stock has advanced 2.3% in Thursday's premarket a day after losing 7.4% on Wednesday. AMC's preferred equity unit APE fared even worse in the midweek session, losing 7.7%, and is down another 2.4% in Thursday's premarket. AMC stock is benefiting from Disney's (DIS) earnings, which were ahead of Wall Street forecasts.

AMC Entertainment stock news: Following in Disney's footsteps

AMC stock appears to be tagging along with Disney here on Thursday, along with the rest of the market for that matter. NASDAQ futures are also ahead 1.1% after Disney's results for its fiscal first quarter showed adjusted earnings per share (EPS) about 25% ahead of Wall Street consensus. Revenue also came in $230 million ahead of consensus, and the market was excited about new CEO Bob Iger's plan to slim down the media behemoth by clipping 7,000 jobs.

For its part, AMC stock remains up 45.6% year to date despite Wednesday's drop. Much of the sell-off this week in AMC stock is attributable to fellow meme star Bed Bath & Beyond (BBBY). That company saw shares collapse after announcing a new share sale that will dilute existing shareholders by at least 50 million shares and possibly a lot more. Wednesday and Thursday also saw related stock GameStop (GME) pull back as reality set in regarding comments made by Federal Reserve Chair Jerome Powell on Tuesday demonstrating the central bank's likelihood of keeping interest rates high for the whole year. That realization has also hurt AMC stock this week as traders realize January's rally is unlikely to last in the face of continued tight monetary policy.

In other news, AMC has introduced new tiered pricing for its auditorium seats. Front-row seats near the screen, which are the least popular seats in most auditoriums for movie viewing, will now feature a reduced price. The most coveted seats at the back of the auditorium will now feature premium pricing and will be available to AMC Stubs members for reservation. Regular attendees will be able to purchase premium seating for an additional cost.

AMC stock forecast

AMC stock may consolidate here for a time, but most likely it needs to retest support at $5. That price level is where it found its footing on January 30. A break of that level, or more significantly a close below it, would mean that AMC stock may head back to the $3.80 support level from the start of the year. If AMC shares begin to take off again, many bulls will wait for a solid break of the $7 resistance level that has worked off and on since last October.

AMC daily chart