AMC Entertainment Stock Skyrockets: Here’s the Explosive Reason Why

AMC shares just ripped higher—again. Meme-stock mania or something more?

Retail traders pile in as shorts scramble

The cult following strikes back, turning 'dying theater' narrative on its head. Wall Street analysts? Still scratching their heads.

Another day, another victory lap for the apes. Meanwhile, hedge funds quietly update their LinkedIn profiles to 'open to work.'

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AMC Q2 earnings

AMC actually did lose some money. (Only the adjusted results showed breakeven numbers.) When calculated according to generally accepted accounting principles (GAAP), AMC lost $0.01 per share -- which was still much better than the $0.10 per share the company lost in last year's Q2.

The best news of all, though, is that free cash FLOW for the quarter turned positive, with AMC generating positive cash profits of $88.9 million in the quarter. CEO Adam Aron argued this result "showcased the impressive operating leverage inherent in our business," and expressed the hope that this is "a harbinger of things to come."

Is AMC stock a buy now?

Before you get too excited about AMC stock, however, there are some caveats to consider:

First and foremost is that, while AMC generated cash in Q2, it burned a lot of cash in Q1, such that FCF for the first six months of this year is still deeply negative: $328.1 million -- and actually, a bit worse than the company was doing one year ago. To offset the cash burn, AMC is still taking on new debt ($240 million in Q2) and converting old debt to dilutive stock ($143 million).

Long story short, breakeven is good. Profitable and FCF-positive WOULD be better. AMC stock is still a sell for me.