AMC Stock Is Gaining After Hours. Its Losses Are Shrinking.
AMC Entertainment Holdings
cut its net loss to $344 million in the June quarter. Shares were rising in extended trading Monday after the movie theater firm’s results topped estimates.
AMC’s net loss at 71 cents a share was slimmer than the 94 cents a share analysts had anticipated, according to FactSet. It was narrower than the $1.42 per-share net loss in the first quarter, and a loss of $5.36 a share in the second quarter of 2020. The company also reported revenue of $444.7 million, ahead of expectations for $382 million, up from $148 million in the first quarter and $19 million amid the theater shutdowns in the second quarter of 2020.
Shares of AMC (ticker: AMC) were up 4.6% to $35.34 in after-hours trading. Prior to the report, options markets implied a post-earnings move of about 10% in either direction. The stock has averaged a move up or down of 8% following the past four quarterly earnings reports.
AMC CEO Adam Aron said the company raised $1.25 billion, before commissions and fees, in stock sales during the quarter. The company ended the quarter with $2 billion in cash and undrawn revolving lines of credit.
“We believe this gives AMC financial staying power to navigate boldly amidst coronavirus waters,” Aron said. “And by June 30, substantially all of our theatres were open again to entertain and delight our guests. Thanks to increased vaccination counts in the countries we serve, we started to see rising movie going demand, and we safely welcomed more than 22 million guests back to our theatres across the globe during the course of the second quarter.”
AMC stock is up 656% in the past 12 months and 1,494% year to date. That said, the stock has shed 53% from its peak levels in June. The company’s shares initially surged in January amid a broader rise in highly shorted stocks popular on social media, such as
are so-called meme stocks, meaning their daily moves can be erratic due to nonfundamental factors like short seller activity, social media sentiment, and options volume. AMC led a resurgence in meme stocks in May and early June, though the shares have fallen in recent weeks.
The company’s conference call ran for more than an hour. Aron made several announcements, fielded questions submitted by retail investors, and answered questions from an analyst.
Aron announced that AMC and Warner Bros had reached a formal agreement to show all of their movies in calendar-year 2022 with a 45-day window before films hit streaming services. WarnerMedia previously had said its decision to release films on HBO Max simultaneously with theaters was limited to 2021 due to the pandemic.
He announced the company plans to start accepting Bitcoin for movie tickets and concessions by the end of the year. He also said AMC is in talks to lease as many as eight locations previously operated by Arclight Cinemas and Pacific Theatres, in addition to two previously announced Los Angeles area locations.
Asked repeatedly by retail investors about a partnership with fellow meme stock GameStop for gaming events, Aron seemed to express interest but said the companies had not yet spoken about such an idea. Some investors proposed bold ventures like expanded family entertainment offerings like laser tag and creating original content. Aron stressed that if shareholders were on board with authorizing more stock, he’d have more leeway to invest in growth initiatives.
You’d need to make bold assumptions about the future of entertainment to justify owning the stock at recent levels. The mean analyst price target on FactSet is $5.25 a share, implying 84% downside. On the flip side, AMC hasn’t traded on fundamentals for some time. The earnings report could attract new short sellers, as well as renewed interest in meme stocks on social media.
Write to Connor Smith at [email protected]