AMC Entertainment Stock News and Forecast: AMC gears up for another advance on lower inflation

AMC Entertainment (AMC) stock is roaring ahead on Wednesday, a day after CEO Adam Aron's cinema chain trounced the indices by closing up 20% at $6.07. At Wednesday's open AMC stock is trading up 5.5% to $6.41 even as the NASDAQ futures have advanced just 0.7%. Markets are broadly optimistic on Wednesday after an important inflation reading demonstrated that inflation is falling much faster than expected. 

AMC Entertainment stock news: Retail battles the shorts, Avatar impresses box office

AMC stock continues benefiting on Wednesday from the success of Avatar's new sequel. Avatar: The Way of Water is now the fifth-largest smash hit ever at the box office with $1.9 billion in ticket sales globally. Soon it is bound to overtake Spider Man: No Way Home and rank fourth. It has already surpassed The Lion King. This has reinforced optimism that the movie-going experience is not dead due to streaming and has buffeted AMC stock in the process.

Second, the Producer Price Index for December gave a reading of -0.5% MoM on Wednesday morning. This provoked a hefty helping of excitement since it was yet another sign that inflation is falling quite rapidly. This leads many in the market to expect a near-term pivot, which would come in the form of an end to Federal Reserve interest rate hikes, despite central bank Chair Jerome Powell's repetitive argument that the Fed must remain on hawkish footing.

AMC's related APE equity units have also shown plenty of excitement on Wednesday. APE rose more than 8% at one point to $1.84 before selling off. This is an impressive price nonetheless since CEO Adam Aron sold $110 million worth of APE units to Antara Capital at a weighted-average of $0.66 per unit back in December. Aron used the proceeds to pay off $100 million worth of debt that will save AMC about $10 million a year in interest expense going forward. Prior to the Antara deal, Aron had already used the sale of APE units to retire nearly $180 million worth of debt in 2022. AMC said in a press release that it will be scheduling a meeting to vote on allowing APE units to convert into AMC common shares. 

“Clearly, the existence of APEs has been achieving exactly their intended purposes," said Adam Aron in a statement after the sale of APE units. "They have let AMC raise much welcomed cash, reduce debt and in so doing deleverage our balance sheet and allow us to explore possible M&A activity."

Adam Aron is also pushing to undertake a reverse stock split for AMC shares by giving out 1 share for every 10 that investors currently hold. 

Fellow meme stock champion GameStop (GME) has seen its shares sell off 2.8% to $21.20 after an earlier morning rally on Wednesday.

AMC stock forecast

As can be seen on the daily chart below, AMC stock price is benefitting from the 9-day moving average overtaking the 21-day average. This is a positive sign that typically proves that a rally has legs, and the Moving Average Convergence Divergence (MACD) is also crossing over in bullish fashion. The currently rally has seen AMC stock move off support in early January near $3.80. First, it will have to climb through the supply window (resistance) ranging from $8 to $9.15. This zone pushed AMC prices lower from September through December of last year. After that bulls would face resistance at the longer-term resistance level that surrounds. $10.39.

AMC Entertainment daily chart