AMC Entertainment (NYSE:AMC) stock is providing lots of entertainment, but not necessarily in its theaters.

If you can’t beat ’em, is now the time to join ’em? Indeed, considering short sellers’ profit margins in recent years relative to those with long positions on AMC stock, it’s clear who’s ultimately winning this war.

An impressive meme stock surge in mid-2021 led to AMC stock surging to incredible highs. Many short sellers were wiped out because of this parabolic move, with retail investors reaping profits from a series of surges that year, which continued to hit short sellers hard.

However, with the stock now down more than 98% from its peak, and the company forced to reverse split its stock to stay listed, this is a company on some seriously negative financial footing. Here’s why I think AMC remains a top short idea right now.

Financials Haven’t Improved

Plenty of retail investors, and those bullish on a post-pandemic resurgence in AMC and other theater chains, have pointed to a pathway to profitability as the bullish investment thesis for this sector.

For AMC, a company that’s still producing massive losses, this profitability hasn’t materialized.

In fact, it appears the company may never be profitable, given we’re likely through the post-pandemic spending splurge that sent so many travel and leisure stocks soaring.

One also can’t rely on better movie slates, as the theater industry has been blessed with some top-notch movies in recent years. The writer’s strike is over, and other headwinds are fading.

The stars have aligned to what should have resulted in a surging stock price for AMC.

The company’s fundamentals have driven this stock lower of late. A very heavy debt load, combined with continued share sales, has led to a dilutive experience for existing shareholders.

New shareholders considering putting capital to work in a company that’s burning cash and issuing shares is a difficult proposition, especially in these uncertain economic times.

Sentiment Isn’t Improving

One of the key drivers of previous meme stock rallies with AMC is sentiment.

Indeed, without millions of like-minded retail investors banding together to buy the stock all at once, these parabolic surges AMC stock saw wouldn’t have been possible. In order for another squeeze to take place in the future, investors will need to get back on the right side of the boat when it comes to sentiment.

That doesn’t appear to be happening. As I pointed out in a recent piece, retail investors appear to be growing increasingly frustrated with the CEO pay structure, and the lack of interest in the well-being of retail investors.

The company continues to issue shares and dilute existing shareholders, while paying massive salaries and bonuses to its top brass. Until this changes, I’m not sure that the self-described degenerate apes will want to step in and buy AMC stock, even at these rock-bottom levels.

What Now for AMC Stock?

It’s been my view for a long time that AMC is likely destined for some sort of either consolidation or bankruptcy.

The industry may survive, in a much smaller or more niche form. And over time, the evolution of the film industry may ultimately benefit consumers, at the expense of those in the industry. That’s just a fact.

AMC’s business model is one I think is broken. Until something fundamental changes, and the company can provide a clear pathway to profitability, this is a stock to avoid.

In fact, it’s a stock I think investors could profitably short all the way down, if they haven’t been doing so already. I think there’s more risk to owning this stock on the long side than short.

On the date of publication, Chris MacDonald did not have (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.