New blockbuster films like “Fast 9” and “A Quiet Place Part II” bolstered revenues at AMC Entertainment, even as the reemergence of a new and highly contagious variant of coronavirus threatened to undue the theater industry’s recent gains. A better-than-expected earnings report sent shares of the company surging in after-hours trading, though that enthusiastic response is to be expected given AMC’s new status as a meme stock.
That said, there were signs that after a devastating year in the wilderness, AMC and other theater chains are starting to see improvements. Revenues at the exhibition giant hit $444.7 million, up from $18.9 million in the year-ago period. Losses also shrank. AMC recorded a net loss of $344 million, down from the $561.2 million in losses it recorded during the same time-frame in 2020. The company also logged a net loss of 71 cents per share, an improvement on the losses of $5.38 per share that AMC posted in the year-ago period.
The comparisons were understandably stark. At this point last year, many of AMC’s locations were shuttered, movies weren’t being released theatrically and COVID-19 was raging unchecked through the country. AMC’s attendance numbers reflect that story. Admissions for the three-month period ending in June hit 22 million. Last year at this point, they stood at 100,000.
Wall Street was expecting the company to report a loss per share of 94 cents on revenue of $382.25 million, thresholds that AMC easily eclipsed. And yet, the results come at a difficult moment for the theater business, as the spread of the delta variant appears to be dampening attendance. It’s a sector that is also being hit hard by the shifts in distribution models as companies like Disney and Warner Bros. continue to release movies on their in-house streaming services at the same time they debut them in cinemas. Exhibitors believe that’s depressing ticket sales.
None of those concerns matter to AMC’s most ardent investors. AMC is currently experiencing the benefits of being embraced as part of a Reddit-fueled retail investment revolution. It’s one that has also lifted the likes of GameStop, BlackBerry and other companies, enabling them to slip the surly bonds of balance-sheet based metrics to trade on populist sentiment. True to form, AMC’s stock rose more than 7% on news that it had handily beaten projections.
AMC chief Adam Aron even appeared to give a tip of the hat to these new investors, saying in a statement, “Our sheer will to drive through this COVID-19 crisis clearly resonated amongst those who also were committed to our survival, because seeing movies in theaters has been a central part of the cultural fabric of society the world over for decades and decades and decades,” he said. “There are many who shared our passion that moviegoing at our theaters should continue for future generations. Accordingly, we are ever so grateful to the friends and allies that AMC has gathered along the way.”
Wall Street may quibble with Aron’s characterization of these activist traders as driven more by their passion for cinema than a desire to stick it to short-sellers, but whatever their motivation, the interest in the company has undeniably allowed AMC to improve its financial position by issuing new stock. In recent months, AMC’s leaders have also successfully renegotiated the company’s massive debt obligations. The exhibitor said it has cash of $1.81 billion and more than $2 billion in liquidity.
“We would like to think that someday when a movie is filmed about AMC and COVID, its title will be one compelling word, ‘Recovery,’” Aron said. “But, only time will tell.”