AMC Entertainment (NYSE:AMC) CEO Adam Aron reflects on the “meme stock” frenzy of 2021 and expresses his optimism towards the company’s future.
Today, AMC stock is up more than 32% year-to-date and has survived some of the most challenging seasons a business in its unique circumstances could have gone through.
In an interview with The Wrap, Adam Aron says he recalls when the company almost ran out of cash with only four to six weeks of cash on hand.
AMC came close to collapsing during the pandemic lockdowns when AMC Entertainment went from generating several millions per month to $0 in an instance.
“We almost ran out of cash five different times. We had times where we had just four to six weeks of cash on hand”, the CEO said.
AMC Entertainment was able to raise $5 billion from March 2020 to March 2021.
The biggest help came in January when retail investors flooded the market and purchased shares of AMC stock en masse, sending AMC shares from $2 per share to $20 per share.
“That’s a big reason we’re standing here today,” says Adam Aron.
AMC Entertainment Prepares for Pre-Pandemic Levels
Adam Aron told The Wrap that he sees Hollywood returning to something approximating pre-Covid levels of regular theatrical releases.
There were only 70 wide releases in 2022 compared to 140 in 2019, and that number is already around 100 for 2023 so far.
According to The Wrap, Adam Aron believes that AMC is out of the woods today.
“Overall box offic is up by about 1/3 compared to 2022.
If the theatrical industry overall ends up with between $8.5 billion and $10 billion for the year, AMC will have a significant recovery.”
However, Adam Aron, like many professionals in the industry, doesn’t believe that the domestic box office will reach pre-Covid levels until 2024 the earliest and 2025 the latest.
“The box office is on a positive ramp, and if we have the ability to raise cash if we need to, I have no real fear,” said Adam Aron.
Analysts Are Now Predicting Big Growth for AMC Entertainment
Analyst firm Benchmark raised its growth estimates for AMC Entertainment Friday, citing better-than-expected domestic box office performance.
AMC will be reporting its fiscal first-quarter results before market open on May 5.
Benchmark now estimates that AMC will report first-quarter revenue of $912 million, up from its prior estimate of $831 million.
Analysts surveyed by FactSet are looking for first-quarter revenue of $930 million.
“Domestic box office exceeded our expectations,” Benchmark analyst Mike Hickey wrote in a note released Friday.
The analyst firm also raised its estimate for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to a loss of $37 million from its prior estimate of an $86 million loss.
Analysts surveyed by FactSet are looking for an EBITDA loss of $33 million.
Benchmark currently has a hold rating for AMC Entertainment.
Benchmark’s Hickey expects AMC to raise capital as soon as the settlement is resolved.
“We think AMC will immediately tap the capital markets on a successful transaction,” he wrote. “The capital raise would likely be used to provide relief to AMC’s significant net debt obligations.”
Related: Amazon and Apple Are Now Contributing Billions to Movie Industry
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Thanks for DD and article. What do you all expect between now and day of settlement regarding AMC/APE now apparently Antara is buying a lot AMC and dumping some APE for a reason? Thanks sharing your ideas
Hi Vinz, thanks for your comment. There’s definitely a lot of uncertainty at the moment with Antara, the current economy, and overall today’s market conditions. I stick 100% by the original DD of 2021 that moved AMC shares from $2 to $20 and eventually to $72 per share. BIG buying volume from institutions and retail investors = higher share prices (despite dark pool %) which = short positions closing/short squeeze. Anything outside of this is either speculation or a long-term commitment for a company fundamentally. I think it’s important to identify whether investors are in AMC specifically for a short squeeze or for a long-term commitment that does not rely on the short squeeze thesis. The company stock has the short interest for a short squeeze, it just needs the heavy buying pressure we saw two years ago. The problem today is that we’re in a bear market and most investors are playing defense rather than offense. The last article I published on Antara, the company had let go all of its AMC shares, which I compared to Wanda Group in 2021. The best time to buy in the stock market is during a bear market. However, it’s important to identify why you’re buying into a specific ticker/company. Antara and others are buying or selling to make money, period. Most investors are in this for a short squeeze, but a reverse stock split complicates things a little. I cannot offer financial advice, but merely present information as it comes. Hope this helps some way. My advice to investors is to be clear on your why, and to have a plan. The company’s duty is to look after the company first then the investors second.
Thanks Frank for your informative reply which is appreciated!
Think most players in AMC are in here for a short squeeze rather than long term but like you said, big buying volume is needed then. It’s sad to see they don’t ban Dark Pools or close them for a while, should be nice if judge would do that. Also very curious what total share count would be if DTCC or MM would provide these figures ;-), judge really should demand them. Or why is the court not making it possible for every shareholder to submit their amount of AMC/APE shares to them through a declaration form of retail holder its’s broker or bank?
The APE creation: still questionable what happend there … was not really a free bonus and they did not get the money for AMC when it was around 10$.
Some buying pressure would be nice.
Tanks sharing info.
Leave your thoughts below.