The question is, will Citigroup’s bet against the world’s largest movie theatre chain backfire in 2023?
AMC Entertainment stock is currently up nearly +13% this year-to-date and was up more than +40% for majority of the year.
The AMC apes have not left, which poses a similar risk as seen during the ‘meme stock’ frenzy of 2021.
Citigroup analysts are predicting a -47.45% downside for the movie theatre company, which really means nothing as long as retail investors decide to continue buying the stock throughout the year.
There are 460 funds or institutions reporting positions in AMC Entertainment Holdings Inc.
This is a decrease of 29 owners or 5.93% in the last quarter.
However, average portfolio weight of all funds dedicated to AMC is 0.15%, an increase of 190.35%.
Total shares owned by institutions increased in the last three months by 3.81% to 139,260K shares, per Nasdaq data.
According to Fintel, Citigroup has a stronger bias towards the downside, who currently holds call options representing 11,648,500 of underlying shares valued at $58,358,985 and put options representing 37,779,400 of underlying shares valued at $189,274,794.
In November of 2022 Citigroup dropped AMC’s price target from $3.13 per share to $1.20 per share as it sold majority of its shares in December.
The attempted ‘short and distort’ campaign proved to be a failure as shares rose in the beginning of 2023.
Macquarie Analyst Expects to See Big Growth In AMC
Macquarie Analyst Chad Beynon expects to see big growth in AMC Entertainment.
“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 this year.
“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.
In June, AMC CEO Adam Aron has announced the company had broken a new food and beverage sales record.
High Box Office Numbers Indicates Big Growth for AMC
Today’s high box office numbers indicate big growth for AMC Entertainment as revenue nears pre-pandemic levels.
Box Office Mojo reports more than$2.2bn in gross revenue for the second quarter of 2023 alone.
That’s more than Q1 box office numbers at $1.7bn.
The industry expects The Flash from Warner Bros’ DC is heading for a Friday around $26M, which will yield a 3-day around $64M, and 4-day north of $72M+ across 4,234 movie theaters.
Spider-Man: Across the Spider-Verse is looking at a $8.4M third Friday, $28.9M third weekend, and running total of $286.8M by Monday, which is 14% ahead of the first Tom Holland movie, Spider-Man: Homecoming at the same point in time (that movie finaling at $334.2M), according to Deadline.
So far, the number 1 release across the industry for Q2 is The Super Mario Bros. Movie, grossing more than $571 million.
Will new Citigroup bets against AMC Entertainment backfire in 2023?
I’d love to hear your thoughts on this in the comment section below.
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