AMC Entertainment (AMC) just acquired seven former Bow Tie Cinemas locations.
Five of which are in Connecticut, one in upstate New York, and another one in Annapolis, Maryland.
The new movie theatres in Connecticut will double AMC’s presence in the state.
Has AMC Entertainment officially become a fundamental play?
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AMC buys seven Bow Tie Cinemas locations
AMC Entertainment CEO Adam Aron announced on Twitter that AMC continues to play on the offense as they acquire seven Bow Tie Cinemas locations in the northeast.
Bow Tie Cinemas locations that previously served alcohol will continue to offer wine, beer and liquor and be rebranded under AMC’s MacGuffins brand.
While the converted theaters will no longer honor Bow Tie Cinemas Criterion Club rewards, impacted customers who sign up for AMC Stubs with the same email used for their account will be rounded up to the next Criterion Club award they would have received under the program.
The largest movie theatre chain in the world has also acquired several Cinemark Cinemas locations.
AMC Theatres reopened Cinemark’s former lease as AMC Evanston 12 in Chicago earlier this year.
Last year the movie theatre chain took over the famous Gove and Americana theatres in Los Angeles.
Both of which were listed in the top 30 most successful movie theatres in the world.
AMC has had a rocky drop since it surged to $72 per share back in May of 2021.
The short interest data shows us that it is still primed to squeeze shorts from their positions.
But is AMC Entertainment now a fundamental play?
AMC now has positive EBITDA and lower debt
AMC now has a positive EBITDA after 2 years.
The company announced it has a positive operating cashflow of $160 million.
EBITDA provides investors with a snapshot of a company’s overall financial performance.
Fundamentally speaking, it’s a massive win for AMC Entertainment as a business.
AMC Shareholders were able to arm AMC with more than $1.8 billion in liquidity for Q4 of 2021.
CEO and President Adam Aron said this $1.8 billion will provide AMC with more security and flexibility to go on the offense.
Which we’ve seen with these new movie theatres and with the 22% stake acquisition of Hycroft (HYMC).
AMC Entertainment paid $61 million in Q4 of deferred (postponed) rent, reducing the total debt to $315 million.
It reduced a total of $155 million of deferred rent in the last 9 months of 2021.
At this rate, the company could be caught up with their deferred rent by 2023.
They plan to reduce the deferred rent by $150-$200 million in 2022 leaving them with $160-$115 million left for 2023.
Last year the company sold a $950 million junk bond which enhanced their financial stability.
Is AMC a fundamental play now?
Given the company’s fundamental growth, it’s safe to say AMC is now a fundamental play.
They’ve gotten through the worse part of the pandemic and straining debt and have raised enough cash to expand the brand though new movie theatre acquisitions, and distressed investing.
Does this change the narrative that AMC is a short squeeze play?
Like GameStop, these two companies have established themselves in very unique positions.
One where investors will likely continue to invest in even after a short squeeze.
But I’m curious to hear your thoughts.
Leave a comment down below.