AMC Entertainment Holdings Inc. reports third-quarter results on Nov. 8, with the meme-stock darling grappling with a “dearth” of major new movie titles in August and September.
The movie-theater operator was a victim of pandemic-era lockdowns before attaining a meme-stock status that sent its stock skyrocketing last year, then plummeting back to earth.
Analysts surveyed by FactSet are looking for AMC
to report a net loss of $238 million, or 20 cents a share, compared with a loss of $224 million, or 27 cents a share, in the same quarter of last year. The company is expected to report sales of $961 million, up from $756 million in the same period last year, according to FactSet.
AMC’s admissions revenue is expected to be $552 million, compared with $421 million in the same period last year, FactSet data show. Analysts project concessions sales of $324 million, up from $263 million in the prior year’s quarter.
In its second quarter, AMC reported a narrowing loss that beat expectations, along with revenue that was in line with analysts’ forecasts. However, it said that this year’s third quarter would be relatively quiet in terms of major movie releases. In August, when AMC reported its second-quarter results, CEO Adam Aron spoke of the “dearth” of big titles being released in that month and September, adding that “things will slow for several weeks.”
AMC competitor Cinemark Holdings Inc.
acknowledged a similar challenge in the third quarter. In the company’s earnings release, Cinemark CEO Sean Gamble said that August and September saw a “dip in content availability,” but he highlighted a 130% year-to-date increase in North American box office. Cinemark’s stock ended Friday’s session up 9.4%, lifted by a narrowing third-quarter loss and significantly better-than-expected revenue.
In a note released last month, B. Riley analyst Eric Wold slashed his AMC price target, citing concerns that the postpandemic box-office recovery will take longer than previously forecast. The number of films released to cinemas remains around 50% lower than prepandemic levels, he warned.
“We now believe it may not be until 2024 before the domestic box office can again surpass $11 billion — as was the case for every year between 2015 and 2019,” Wold wrote. The price cut pushed AMC’s stock down to pre-meme-stock levels.
Nonetheless, the last few months have been eventful for AMC. The company’s AMC Preferred Equity Units, or APEs
made their trading debut in August, sparking volatility and heralding the latest chapter in an eventful journey that took the cinema chain from beleaguered pandemic victim to meme-stock phenomenon.
With its APE equity unit, AMC created something like a 2-for-1 stock split, marking the company’s latest effort in a fight over stock issuances. AMC is also taking aim at its massive debt burden with the APE special dividend. The name is a nod to the investors who turned the company into a meme stock, who often refer to themselves as “apes” or “ape nation.” AMC issued an APE for each of its roughly 517 million shares outstanding.
However, the APEs have fallen 73.8% since their debut. The dividend has fluctuated from an intraday low of $1.48 on Oct. 13 to an intraday high of $10.50 on Aug. 22.
In September, AMC unveiled plans to sell up to 425 million additional APEs, sending the equity units toward a new low.
AMC’s stock has fallen 66.2% this year, outpacing the S&P 500 index’s
decline of 20.9% over the same period. Over the last three months, AMC has fallen 58.5%, compared with the S&P 500 index’s fall of 9%. Fellow meme stock GameStop Corp.’s
stock has fallen 33.8% in the last three months.
A big question mark still hangs over AMC’s long-term profitability, according to Dan Raju, CEO of cloud-based financial services provider Tradier. “Stock prices of AMC and GameStop are artificially inflated because of the meme following they carry,” Raju told MarketWatch via email. “While movie theater attendance seems to be back to prepandemic levels, AMC continues to struggle to show a clear path to sustained profitability.”
“While I do not expect meme-stock rallies like we saw in 2020 and 2021, we will see short-term meme behavior with AMC stocks because of its existing popularity among folks who engage in momentum trading,” he added.
While AMC remains a cause célèbre for a vocal community of individual investors, the company’s financial health is a cause for concern, according to data from RapidRatings, a company that assesses the finances of public and private companies.
Of eight analysts surveyed by FactSet, three have a hold rating and five have a sell rating for AMC.