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AMC Entertainment Holdings Inc. cannot lose. Or, at least, that seems to be the feeling among many investors.

Rising out of the ashes of the pandemic, AMC has issued more and more stock in an attempt to iron out a crumpled balance sheet. Since the opening of 2021, the company's share count has gone from just over 200 million outstanding to over 500 million. While that would typically result in a dilutive impact on a firm's share price, AMC's stock price has soared over 2,500% in that time.

The company saw a quarter-end market capital low of $329.6 million in March 2020 when the pandemic challenged AMC's very existence. As recently as the end of fourth quarter 2020, the company's market cap was at just $475.6 million. But by the close of June 17, that number had catapulted to a shocking $31.17 billion. As of midday June 21. AMC's market cap had retreated to $28.72 billion, but that is still over 13x the previous three-year high of $2.12 billion at the end of the third quarter 2018, according to data compiled by S&P Global Market Intelligence.

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Much of the exuberance has come from retail investors rallying around AMC on social media websites like Reddit.

"AMC now has an army of passionate, interested individual shareholders," CEO Adam Aron said during an earnings conference call with analysts, during which he announced AMC Investor Connect, a loyalty program for theater-going retail investors.

However, retail and institutional investors remain divided on whether that exuberance is overdrawn.

Earnings woes

In the first quarter, even as theaters were starting to reopen, AMC reported total revenue of $148.3 million, down more than 84% from $941.5 million in the year-ago period. Attendance remained similarly down at 6.8 million, off by 88.8% from 60.5 million.

While AMC's revenues have gone down due to the pandemic, its debt load as of the end of the first quarter had gone up, rising to $11.05 billion from $10.50 billion at the end of first quarter 2020.

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But more recently, AMC has used its share price momentum to issue stock to pay down debt. Just since the opening of May, AMC offered equity of 43 million shares at $428 million, 8.5 million shares at $230.5 million and 11.55 million shares at $587.4 million.

For its efforts, the company recently garnered an upgrade from S&P Global Ratings, which moved its corporate credit rating to CCC+ with a positive outlook. AMC has been aggressively pushing stock issuances to reduce its debt load, and S&P Global Ratings cited the strategy as the reason for the upgrade, saying the equity issuances should help AMC avoid a debt restructuring.

B. Riley Securities analyst Eric Wold said in a note last month that AMC's "improved balance sheet eliminates liquidity concerns."

Nevertheless, Wold downgraded AMC from "buy" to "neutral," citing valuation concerns amid the stock's surging prices. "We are moving to the sidelines with an inability to justify taking that PT any higher at this point," Wold said, having at the time set a $16 price target.

AMC shares were trading at $55.54 as of midday June 21.

Wedbush Securities analyst Alicia Reese was more emphatic in a recent note on the exhibition industry. Reese cited outperform ratings on Cinemark Holdings Inc. and IMAX Corp. but pegged AMC as an outsider in the group.

"We do not recommend buying shares of AMC here as we think its share price no longer reflects its fundamentals, elevated by retail investors whose time horizons for holding are unclear," Reese said in the note.

Out of the box

Beyond AMC's improved liquidity position, there are other reasons for optimism around the stock. One of the most visible signs of strength for AMC has been the box office recovery in recent weeks. The pandemic lockdowns have receded, many consumers are vaccinated and moviegoers are showing up in considerable numbers.

The Memorial Day weekend debut of "A Quiet Place 2" smashed box office expectations and even matched the 2018 opening of its breakout-hit predecessor. The title landed a pandemic-era opening record of $48 million between May 28 and May 30, and over the June 4 weekend, it became the first film since the pandemic to crest the $100 million sales mark.

Exhibition investors are also looking ahead to the domestic debut of "F9," the ninth installment in the Fast & Furious franchise, which forecasts as high as $90 million over the June 25 weekend. That title has already collected over $250 million in international openings, according to Variety.

"We see an attractive set-up for a domestic box office rebound from the combination of (1) pent-up demand for moviegoing that has been evident in other regions around the world; (2) an impressive, blockbuster-fueled film slate that has stabilized in recent weeks; and (3) updated distribution agreements with studios that highlight the importance of exclusive theatrical windows," Wold said.

Gritty reboot

But while Wold is optimistic about the box office recovery, he and other equity analysts have retreated from AMC, arguing the share price is no longer connected to company fundamentals.

And even AMC is warning investors against risking their life savings on the company's stock. In an ominous disclosure, the company said investors should not buy its stock "unless you are prepared to incur the risk of losing all or a substantial portion of your investment."