The meme dream is clearly over for AMC Entertainment (NYSE:AMC). AMC stock, which alongside GameStop (NYSE:GME), became one of the top meme stocks during 2021, has all but coughed back all of its gains from this odd chapter in investing history.

Shares in the movie theater chain have made a noticeable move higher since the start of 2023. Yet at around $5 per share today, AMC is still basically back near where it started when the meme boom began, and a far cry below its all-time closing high of $62.49 per share.

This is clearly bad news for investors who held onto AMC with diamond hands. However, if you don’t own shares now, are they trading at a bargain?

Although far cheaper than it was a year ago, it’s questionable whether AMC stock is a bargain.

AMC Stock: Cheap, But Not Undervalued

AMC Entertainment may be down around 91.6% from its high-water mark, but that doesn’t necessarily mean it has become undervalued.

In fact, based on traditional valuation metrics, AMC stock appears downright pricey. Shares sport a negative book value, and even when using advanced valuation metrics like enterprise value/EBITDA (or EV/EBITDA), the company trades at a high multiple (105.8x).

Sure, it  may seem unfair to assess AMC’s valuation based upon the company’s trailing 12-month performance. After all, the movie theater operator is still recovering from the impact of the Covid-19 pandemic. Compared to other types of brick-and-mortar businesses, movie theaters have yet to make a full recovery.

That said, it only makes sense to cut AMC some slack if the company was poised to fully retake pre-pandemic levels of revenue and profitability within the next year. A box office forecast from research firm Gower Street calls this into question. Gower Street forecasts that U.S. box office revenues will climb just 12% this year, to $8.6 billion. That’s around 25% below the $11.4 billion in U.S. box office reported in 2019, right before the pandemic.

Bankruptcy and Dilution Risk

Admittedly, it’s possible that AMC’s operating results improve to a greater extent than implied by the aforementioned box office forecast. For instance, it has acquired additional theaters over the past year, most recently taking over a shuttered ArcLight cinema located in Boston, Massachusetts.

But while revenue growth for AMC could be outsized compared to the overall industry, that doesn’t mean it is on the verge of getting back to profitability. As a Seeking Alpha commentator recently argued, between rising operating costs and high interest expenses, cash burn is likely to remain high this year. Worse yet, there may be a high risk that the company files for bankruptcy in 2023.

I’m skeptical whether such a game over moment awaits AMC Entertainment within the next 12 months. As CEO Adam Aron continues to wheel and deal, this unprofitable, overleveraged enterprise has a strong chance of avoiding having to file for Chapter 11.

However, although this wheeling and dealing can help keep the projectors on, it’s likely bad news for the stock. Why? Alongside successful negotiations with lenders, Aron’s wheeling and dealing leans heavily on dilutive, capital-raising methods.

Sell AMC If You Own It, Avoid If You Don’t Own It Yet

Whether through the sale of AMC common shares, or through the sale of its APE preferred equity units, the company’s raising of additional cash has come at the expense of existing shareholders.

Although past dilution is perhaps already accounted for in the stock’s current valuation, the company’s use of this financing method does not appear to be ending anytime soon.

As InvestorPlace contributor Brett Kenwell discussed on Jan. 20, recent tweets from Aron suggest that AMC is open to continuing down this path. If this proves to be the case, chances are future capital raises will apply more pressure on the stock.

With this in mind, regarding the question of whether AMC stock is a buy or a sell, the answer is clear. If you own it, it’s time to sell, pronto. If you don’t own it yet, avoid it with a capital A.

On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.