GameStop, AMC, and Cinemark Shares Have Been Whipsawed. What’s Ahead.

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For

GameStop,

AMC Entertainment Holdings,

and

Cinemark Holdings,

the past 12 months have been a series of sickening lows and dizzying highs. Now that the worst appears to be over, they are moving to the next difficult phase: delivering a rebound.

All three are emerging from brutal pandemic lockdowns. GameStop (ticker: GME) and AMC (AMC) also made it through short squeezes and retail trading frenzies. Each is now maneuvering through what many consider permanent shifts in the way consumers shop and seek entertainment.

The companies each have mapped out paths forward, but at least two of the stocks—Gamestop and AMC—are apt to face more struggles.

GameStop, which sells new and used videogames and consoles, is trying to transform itself from a collection of 5,000-plus traditional stores to a nimble digital force under the eye of

Chewy

(CHWY) founder Ryan Cohen, who bought a 9% stake last year and assumed a board seat. Shares jumped 97.1% last week, to a recent $264, on the formation of a committee on the company’s reinvention.

Still, revenue was already trending down, from $9.2 billion in 2018 to $6.5 billion for 2020 and an estimated $5.2 billion for 2021. Analysts tracked by FactSet expect per-share losses for 2021 and 2022.

Barron’s thought the shares looked pricey at $18 in January, and we haven’t changed our minds, given the monumental challenges ahead. GameStop said its committee will look for “identifying actions” to transform the company into a technology business.

AMC and Cinemark (CNK) both are getting new life, particularly with the opening of theaters in major markets like Los Angeles and New York City. AMC beat earnings expectations for the fourth quarter, and shares popped 40.4% this past week, to a recent $11.16. But Lightshed Partners’ Richard Greenfield says AMC’s debt load—equal to 8.3 times 2022 estimated earnings before interest, taxes, and amortization—makes the stock a Sell. His price target: one penny.

AMC couldn’t be reached for comment.

Not all analysts are negative, but many point to AMC’s steeply rising costs, such as $450 million in deferred rent. AMC has been raising cash by selling shares and issuing convertible debt, and said in an earnings release Thursday that “we will continue to actively explore alternatives to raise additional capital and reduce our leverage.”

Cinemark has less debt; leverage is under five times 2022 Ebita, and it is selling a $405 million bond to retire some of it. Cinemark recently flexed its muscles with Hollywood, opting not to show

Disney’s

(DIS) Raya and the Last Dragon, denting premier weekend box-office sales for the studio.

Taking such a stand shows that theater chains still have some power, says Eric Wold of B. Riley Securities, who rates Cinemark a Buy. “This could force studios to take a closer look at distribution strategies,” he says.

Write to Liz Moyer at Liz.Moyer@barrons.com