Macquarie Analyst Expects to See Big Growth In AMC

Macquarie Analyst Chad Beynon expects to see big growth in AMC Entertainment (NYSE:AMC).

“We expect AMC’s business to grow with the market and benefit from strong flow-through given significant fixed costs in the business,” the analyst predicted.

The movie-theater chain beat Wall Street expectations for its Q1 results.

“Our results for the first quarter of 2023 represent AMC’s strongest first quarter in four full years.

We kicked off 2023 by continuing on our positive glide path to recovery, with more than a 21% growth in total revenues and a $69 million improvement in Adjusted EBITDA compared to the previous year.

The first quarter of 2023 and fourth quarter of 2022 mark the first two consecutive quarters of EBITDA since March of 2020.

This progress is a testament to the ongoing recovery in the industrywide box office, as well as AMC’s enduring commitment to the excellence and innovation as our guests enjoy a superb movie-going experience at our theatres,” said AMC CEO Adam Aron.

The analysts with Macquarie Research anticipate that domestic industry box-office revenue will reach $8.7 billion in 2023.

If that happens, it will represent a 19% year-over-year improvement. 

“Road to recovery getting better with box-office strength,” said Macquarie Research analyst Chad Beynon.

“Overall, AMC is highly optimistic about film volumes recovering to pre-pandemic levels over the next few years, supported by growing theatrical aspirations from the likes of Amazon and Apple,” he continued.

The analyst firm also pointed to concession spending at AMC, with first-quarter food and beverage spending per person hitting an all-time high of $7.99, a 50% increase over 2019.

Is the Short Thesis for AMC Entertainment Finally Changing?

We’re beginning to see that more and more analysts are acknowledging AMC’s pathway to recovery and even recognizing the movie theatre chain’s long-term potential.

“Q1 results ride industry tide higher,” wrote Wedbush analyst Alicia Reese, in a note.

“Theatrical exhibition is on the path to normalization, with an improving release slate in 2023.”

“AMC Theatres across the globe welcomed nearly 48 million guests in the first quarter thanks to the continued strength of James Cameron’s AVATAR: The Way of Water, and the knockout power of first quarter releases like Marvel’s Ant-Man and The Wasp: Quantomania, Creed III, Scream VI, Shazam! Fury of The Gods and John Wick Chapter 4.

All told, the first quarter North American box office easily surpassed 2022 by some 29%, totaling more than $1.7 billion.

The recovery in the European box office was even stronger in getting to pre-pandemic norms than that in the U.S.

As I have said for years, when our studio partners showcase their magical storytelling, there is robust demand to be realized at AMC theatres both in the U.S. and abroad.

We believe the first quarter of 2023 is just the tip of the iceberg for what’s to come in the remainder of the year,” said AMC CEO Adam Aron in a statement.

Revenue for the quarter was $954.4 million, compared with analysts’ expectation of $948.5 million, according to Refinitiv IBES data.

Other Big AMC Stock News

AMC FTDs have reached new high records this year in both number of fails-to-deliver and dollar amount.

For the month of April, AMC FTDs soared between 17 million and 18 million, reaching new high records this year.

The dollar figure topped at $85.4 million on April 10th, though none of these number figures are cumulative.

FTDs, or Failure-to-deliver occurs when one party in a trading contract (whether it’s shares, futures, or options) fails to deliver on their obligations.

These failures derive due to buyers not having enough money to take delivery and pay for the transaction at settlement.

In the case of sellers, it means not having the goods to meet that transaction.

Data shows that more than 50% of AMC Entertainment’s (NYSE:AMC) volume is now consistently trading in dark pools.

Gary Gensler announced exclusively on Bloomberg that 90-95% of retail orders don’t go through the lit exchange.

The SEC Chairman says these orders are rerouted to dark pools rather than the NYSE.

Payment for order flow (PFOF) is also partly the reason why orders aren’t processed in the lit exchange.

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