AMC Entertainment (NYSE:AMC) had a home-run weekend. The opening of Black Widow saw huge successes. But even with theatergoers returning to cinemas, there is an unanticipated blow being dealt to the industry. AMC stock was able to overcome the Covid-19 pandemic, but will it be able to overcome a trend of studios going straight to the living room with their releases?
AMC saw a huge movement toward its theaters this past weekend thanks to Black Widow, which grossed $80 million at the box office. AMC in particular saw 3.2 million customers at its U.S. locations over that weekend, as well as over 650,000 customers abroad.
This was the biggest weekend for AMC’s business in well over a year.
However, some analysts are becoming worried about AMC stock, citing a new concern. The past year was spent fighting off the bearishness of the pandemic market. With no customers, things looked extremely bleak for the theater chain, not to mention the crushing debt the company accumulated. Retail investors are bailing out AMC stock in a huge way, thanks to the short squeeze in January, which is continuing through today. It’s been rescued from its debt and is working on turning around to make investors holdings worth the risk of the squeeze.
AMC Stock in Danger as Disney Offers New Releases Through Streaming
But, AMC and other theaters are by no means out of the woods; a new adversary is arriving in the form of direct-to-streaming movie releases. Disney (NYSE:DIS), which owns Marvel Studios, is offering up Black Widow already through its Disney+ streaming service.
Movie theaters aren’t going to be shuttering their doors just because of this; there will certainly be a market for the social aspect of theatergoing. However, streaming services are now beginning to steal a large portion of market dominance from theaters. Black Widow might have grossed $80 million in cinemas, but Disney saw $60 million of its own revenue from selling the movie directly through Disney+.
The damage to AMC stock can’t really be quantified. Who knows where this success will take production studios? Could we be looking at a future where all movies release straight to streaming alongside theaters? How might this change theatergoing habits? Only time will tell, but it seems like some may be pessimistic. And in the meantime, analysts are sounding the alarm on brick-and-mortar theater companies.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
