In the June quarter, AMC Entertainment Holdings reduced its net loss to $344 million. The stock was up when the movie theatre company’s earnings were above expectations.
AMC Earnings
AMC reported a net loss of 71 cents per share on Monday, less than the 94 cents per share expected by analysts. It was better than the first quarter’s net loss of $1.42 per share and the second quarter’s loss of $5.36 per share in 2020. Revenue was $444.7 million, above estimates of $382 million, up from $148 million in the first quarter and $19 million in the second quarter of 2020 due to theatre closures.
AMC CEO Adam Aron said the business raised $1.25 billion in stock sales during the quarter, before commissions and fees. The firm had $2 billion in cash and undrawn revolving lines of credit at the end of the quarter.
“We think this provides AMC with the financial stability it needs to navigate the coronavirus seas boldly,” Aron added. “By June 30, nearly all of our theatres were open to entertain and thrill our patrons again. We started to witness growing movie-going demand thanks to improved vaccination numbers in the countries we serve, and we securely welcomed more than 22 million guests back to our theatres throughout the world during the second quarter.”
AMC held all 593 domestic theatres and 335 international theatres, accounting for over 95% of all international sites. During the quarter, more than 22 million people visited movie theatres, up from 100,000 in the same period previous year.
AMC increased its cash position to $1.81 billion thanks to a comeback to the box office and a series of stock and debt issues. The firm hiked ticket rates by roughly 5% last week, which is about a 50 cent increase per ticket on average.
Stock
In pre-market trade Tuesday, shares of AMC (ticker: AMC) were up 10.5 percent to $37.33. Options markets predicted a post-earnings move of approximately 10% in either direction before the release. Following the last four quarterly earnings announcements, the stock has averaged an 8% swing up or down.
The stock of AMC has increased by 656 percent in the last year and is up 1,494 percent year to date. However, since its June highs, the stock has lost 53% of its value. In January, the company’s price soared alongside a larger rally in heavily shorted firms popular on social media, such as GameStop (GME).
AMC and GameStop are “meme stocks,” which means their daily movements are unpredictable owing to nonfundamental reasons such as short-seller activity, social media sentiment, and options volume. In May and early June, AMC led a rebound in meme stocks, however, the price has dropped in subsequent weeks.
The conference call with the firm lasted over an hour. Aron made a number of announcements, as well as fielding questions from individual investors and an analyst.
AMC and Warner Bros Deal
AMC and Warner Bros. have signed a formal deal to screen all of their films in the calendar year 2022, with a 45-day buffer before they hit streaming sites, according to Aron. Due to the pandemic, Warner Media has stated that their plan to broadcast films on HBO Max concurrently with cinemas will be restricted until 2021.
Bitcoin for movie tickets?
By the end of the year, he said, the firm expects to start taking Bitcoin for movie tickets and refreshments. In addition to the two previously announced Los Angeles area properties, he said AMC is in discussions to lease up to eight locations previously run by Arclight Cinemas and Pacific Theatres.
When asked repeatedly by retail investors about a gaming event cooperation with fellow meme stock GameStop, Aron sounded interested but stated the two firms had not yet discussed the possibility. Some investors suggested risky initiatives such as expanding family entertainment options such as laser tag and generating unique content.
Aron stated that if shareholders agreed to authorize more stock, he would be able to invest more in growth projects.
Will the soaring last? Probably No.
To justify holding the stock at current levels, you’d have to make some big predictions about the future of entertainment. On FactSet, the average analyst price objective is $5.25 per share, suggesting an 84 percent downside. AMC, on the other hand, hasn’t traded on fundamentals in a long time. The earnings announcement may entice fresh short sellers, as well as rekindle social media interest in meme stocks.