10 Worst Communication Services Stocks to Buy According to Short Sellers

7) AMC Entertainment Holdings, Inc. (NYSE:AMC)

Short % of Float (15 August 2024): 14.22%

Number of Hedge Fund Holders: 19

AMC Entertainment Holdings, Inc. (NYSE:AMC) is involved in the theatrical exhibition business. The company owns, operates, or has interests in theatres which are located in the United States and Europe.

In the mid of August 2023, AMC Entertainment Holdings, Inc. (NYSE:AMC) got hit with a class-action lawsuit on behalf of preferred shareholders challenging its stock conversion plan. This came after the company ended a bruising legal fight with different investors. The company got court approval regarding the settlement of a class action lawsuit by holders of its common stock. This paved the way for the company to convert its preferred stock (APEs) to common shares. The company then mentioned that the conversion plan was critical to strengthen its finances.

However, in May 2024, a pension fund and the company’s investor defended a settlement they negotiated with AMC Entertainment Holdings, Inc. (NYSE:AMC) so it could go ahead with the stock conversion being opposed. One of the retail traders is asking Delaware Supreme Court to reverse the settlement which was approved in August 2023 by a lower court. This investor alleged that the pension fund and the individual investor colluded with AMC Entertainment Holdings, Inc. (NYSE:AMC) to dilute meme stock investors in the conversion of preferred equity units into common stock, reported Bloomberg. The investor’s attorney, Anthony Rickey of Margrave Law LLC, highlighted that the conversion has left some shareholders destitute.

The reversal of the order will offer these shareholders hope for recovery from the defendants who did wrong to them.

However, Wall Street analysts and market experts believe that the stock holds strong growth potential over the long term, considering its well-diversified theater experience and loyalty program. AMC Entertainment Holdings, Inc. (NYSE:AMC) provides a loyalty program called AMC Stubs. This includes several tiers with varying benefits, like free upgrades on concessions and reward points. As a result, this is expected to help the company enhance customer loyalty and repeat business.

Moreover, the company’s subscription service, AMC Stubs A-List, provides steady revenue visibility for the long term. AMC Entertainment Holdings, Inc. (NYSE:AMC)’s partnerships with film studios and distributors should act as a competitive advantage, which should help it achieve revenue and earnings growth. For example, its recent alliance with REI to showcase outdoor-themed short films provides a strong opportunity for cross-promotions.

On 12^th August, Morgan Stanley gave the price target of $10.00 on the shares of AMC Entertainment Holdings, Inc. (NYSE:AMC). As per Insider Monkey’s database, 19 hedge funds reported owning stakes in the company, up from 17 in the preceding quarter.