The domestic box office has come roaring back and that is propelling AMC Entertainment (NYSE:AMC) stock sharply higher today.
AMC has announced that ticket revenues in October at its more than 10,000 movie theaters was the highest since the start of the pandemic.
This news has pushed AMC stock 2% higher, and has the company trending on Yahoo Finance. This is welcome news for the world’s biggest movie theater operator after most of its cinemas were forced to close during the pandemic. It also helps to justify AMC’s current share price after it was targeted as a meme stock earlier this year.
What Happened With AMC Stock?
It was just reported by Comscore that a combination of new movie releases, combined with growing consumer confidence in returning to cinemas, led October to be the highest-grossing month for ticket sales so far this year. Comscore estimates that moviegoers in the U.S. and Canada spent $637.9 million on tickets over the last 31 days to see a slate of new movies that include No Time to Die, Venom: Let There Be Carnage, Halloween Kills and Dune. Many of these highly anticipated films had been postponed due to the pandemic.
The strong showing led October’s box office receipts to surpass the total in July, which previously held the record for highest-grossing month of the year with $583.6 million in ticket sales. The domestic box office has now grossed $3.1 billion through the first 10 months of 2021, which is 45% higher than in 2020 and 66% behind 2019’s pre-pandemic amount.
In a news release, AMC said that “October 2021 ticket admission revenues at AMC’s movie theatre circuit in the U.S. were the highest AMC has seen for any single month since February of 2020.” AMC is the biggest movie exhibition company in the world with 950 theaters and 10,500 screens in North America, Europe and Asia.
Why It Matters
It has been a rollercoaster ride for AMC stock so far in 2021. Targeted as a meme stock by the Reddit crowd of retail investors earlier this year, AMC’s share price is up 1,660% year to date. However, the company’s stock has fallen 8% in the last month over concerns that it is grossly overvalued.
At one point, a Wall Street analyst had a price target on AMC stock of just 1 cent, effectively stating that the company was likely finished because of the pandemic. At the same time, there are rising concerns that the move to streaming and so-called hybrid movie releases (issuing films on streaming platforms and in theaters simultaneously) will kill the domestic box office.
What Comes Next for AMC?
AMC Entertainment is, understandably, trying to prove the naysayers wrong and justify its current stock price of just over $35. Currently, the median price target on the stock is $16, implying a potential 86% correction from current levels. However, AMC stock could remain buoyant in coming months, helped by further releases of highly anticipated movies. In November and December, AMC should benefit from the release of several other films that were postponed during the pandemic. These include Eternals, Ghostbusters: Afterlife, West Side Story, Spider-Man: No Way Home and Matrix Resurrections.
Those new movie releases should keep box office ticket receipts, and AMC stock, higher through the end of this year.
On the date of publication, Joel Baglole 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.