AMC Entertainment Rebounds on Credit Rating Upgrade From S&P
AMC Entertainment rebounds after the movie-theater chain turned meme-stock mascot receives a credit rating upgrade from S&P Global.
M. COREY GOLDMAN23 MINUTES AGO
AMC Entertainment (AMC) - Get Report shares were on the rebound Friday after the movie-theater chain turned meme-stock mascot received an upgrade from S&P Global, thanks to its ongoing efforts in raising cash and paying off pandemic-induced debt.
AMC shares were up more than 8% in premarket trading after S&P Global Ratings upgraded the company’s credit rating to CCC+ from CCC-, a two-notch upgrade that still leaves the company’s debt deeply in what is considered junk bond territory.
If AMC uses its recently acquired cash to pay down debt, refinances expensive debt incurred during the pandemic and sees improved theater attendance, it has “a path to a sustainable capital structure,” S&P said.
AMC has sashayed into the spotlight previously held by video game retailer GameStop (GME) - Get Report, which became a household name in January when its shares soared amid chatter among retail traders on message boards like Reddit to challenge short-sellers and bid the stock higher.
Jim Cramer: Adam Aron Is Playing Offense Thanks to AMC Apes
Since that time, a flurry of companies ranging from Bed Bath & Beyond (BBBY) - Get Report to Wendy’s (WEN) - Get Report to most recently Cleveland-Cliffs (CLF) - Get Report have been dubbed meme stocks amid knee-jerk moves in their respective stock prices, though TheStreet founder Jim Cramer continues to argue that not every stock that suddenly lurches upward is a “meme” stock.
“Not every stock that soars is a "meme" stock, and I am beginning to get sick of the notion that Reddit's WallStreetBets, the most scatological of sites, is behind every major move in this market,” Cramer wrote in his column for Real Money on Thursday, noting that fundamentals - namely, whether a company has a plan and path to profitability - still matter.
“Yes, it is true that, like AMC, a meme stock, it can use the strength by issuing equity so you could argue it's a virtuous cycle, but what matters to me is that it has earnings, so it really does get less dangerous, because of the stock-induced debt pay-down as it goes higher," Cramer wrote.
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