Is AMC’s Outlook Better Than MSM Portrays?
Despite the box office success of several films, revenues at the world’s largest cinema chain fell 15% in the fourth quarter, topping out at $990.4 million.
That was down from $1.17 billion in the prior-year period.
Losses also widened, as AMC posted a net loss of $287.7 million, a steeper shortfall than the $134.4 million in losses it recorded a year ago.
AMC lost 26 cents per share, compared to a loss of 13 cents in the same quarter in 2021.
Shares rose more than 20% on the eve of earnings but fell by 6% at the close.
“The company has fared better than Cineworld, its largest competitor, which was forced to file for bankruptcy in 2022 in the wake of the box office downturn. AMC chief Adam Aron predicted that the worst was behind the exhibition business, noting the influx of new major movies in 2023 and the continued improvement in worldwide ticket sales.” – Variety
Despite posting losses for 2022, the company keeps pushing through, finding innovative ways to raise capital.
AMC announced its branded popcorn “AMC Perfectly Popcorn” to hit more than 2,000 Walmart stores in April.
The company has raised hundreds of millions of dollars through its equity APE and also restructured its debt to stay afloat for several years.
“By no means are we out of the woods yet…but clearly we have been and are now making great progress.
The ability to raise liquidity when needed has proved critical in the past,” Adam Aron said.
This is why the company has urged shareholders to vote ‘yes’ on the proposals that will dilute the stock.
The Movie Industry Has Improved Drastically
Despite AMC Entertainment posting losses during its earnings report, there’s no denying that the movie industry has made a drastic improvement since the wake of the pandemic.
CEO Adam Aron himself has said that what the movie industry is lacking today is the number of movie titles produced throughout the year.
The company has the cash reserves, shareholder base, and support from its creditors to continue improving its business fundamentals.
Its innovations are helping the century-old movie theatre company raise more cash regardless of the debt currently outstanding.
Luckily, Amazon Studios has entered the movie theatre business, aiming to produce more than 10 theatrical releases each year and spend more than $1 billion annually.
AMC Entertainment will be releasing “AIR” in April, one of Amazon Studios’ first original theatrical releases.
Adam Aron mentioned that the company is not out of the woods yet and that at any moment, another catastrophic scenario such as another pandemic event could cripple the company for good.
AMC Entertainment needs to continue raising cash from its shareholders in order to stay afloat until it is able to become profitable again.
However, investors are now being asked to in a sense, become long-term shareholders (longer-term investors) for a company that has their eye on the prize long-term.
Ultimately, that’s what AMC Entertainment has become, a company that has the potential to prosper over time, if allowed to.
Streaming Leans on the Movie Theatre Experience
Netflix’s showing of Glass Onion in movie theaters cost the streaming service $200 million for taking it out too early.
In October, AMC announced its first ever Netflix showing in 200 theatres.
The film earned $15 million at the box office but CNBC says the showing could have made $200 million if it had been kept in theatres longer.
The sequel to Johnson’s popular “Knives Out” opened in nearly 700 theaters, the largest release of any Netflix original film to date, 200 of which were AMC Entertainment theatres.
Unfortunately for the online streaming platform, hundreds of millions of dollars were left on the table.
CNBC stated, “Netflix has backtracked on its previous policies, including by introducing an ad-supported subscription option, leading many to wonder whether the company should rethink its resistance to the traditional Hollywood movie release model as it looks for new ways to grow revenue. “
AMC Entertainment CEO Adam Aron recently praised Disney for scheduling Stephen King’s ‘The Boogeyman’ to be released theatrically on June 2nd, 2023.
The film was originally planned to be released on the streaming service Hulu.
“Theatres beat streamers! We salute producer 21Laps and our friends at Disney for this decision. The Boogeyman, a Stephen King adaption, was made for Hulu. But it tested so well, Disney is releasing it theatrically instead. Thank you Bob Iger, Alan Bergman, Justin, Tony, and Ken,” said Adam Aron on Twitter.
Related: Disney Lays Off 7,000 as Streaming Services Tank
All Signs Still Point to a Short Squeeze
Despite AMC’s fundamentals slowly picking up, and despite the losses, the company is still taking action towards growing.
AMC has been able to utilize its cash appropriately to serve their customers while paying down its debt load.
Short sellers still believe the company stock is overvalued so they are still deep in this play.
But the stock is much harder to borrow today than it was last year.
This means retail investors still have a chance at running share prices higher, and possibly to a new all-time high this year.
There are still 5 big major signs pointing to an AMC short squeeze; this hasn’t changed.
AMC Entertainment has been in a worse position before, and even then, we saw just how unprecedentedly high shares could go.
But I’m curious to know your thoughts.
Will you become part of AMC’s longer term shareholder experience, or are you riding this out specifically for a short squeeze?
Leave your thoughts in the comment section below.
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