Aug. 4 is going to be a very important day for investors. Shareholders will vote on the Tesla (NASDAQ:TSLA) stock split, but another key market event is scheduled for the same day. AMC Entertainment’s (NYSE:AMC) 2022 second-quarter earnings report will be released on the same day. A popular meme play, AMC stock has been rising on mounting anticipation, but the month hasn’t been so smooth.
In late July, AMC stock plunged 20%, but has since rebounded. As of this writing, it is up 10% for the day and 32% for the month. As always, its digital investor army has been hard at work keeping focus on AMC stock as the earnings date draws near.
This season has brought some important catalysts, but the report will reveal how effective they have actually been. More than that, though, it should give investors an important preview for what to expect in Q3. Let’s take a look at AMC’s previous quarter and what investors should be watching for when it reports Q2 earnings.
AMC Stock: What to Watch For
1. Theater Attendance Trends
Ever since Covid-19 impacted American industry, the question has been raised if people will return to movie theaters. With blockbuster films being released on streaming services, Americans have plenty of incentive to watch movies at home. As a leader in the cinema industry, Wall Street has been closely watching AMC since 2022 began to determine theater viewing trends. And while the release of several popular films didn’t make the company profitable during Q1, AMC still posted a narrower-than-expected loss for the quarter. As CEO Adam Aron noted, it represented the company’s best opening quarter since the pandemic began.
Now that the fiscal year is half over, investors will be curious to see if these Q1 growth trends continued into the second quarter. AMC stock hasn’t returned to its March 2022 highs of more than $29 per share. This may garner some skepticism from experts. But if AMC reports even modest sales and revenue growth, it will indicate Americans are still frequenting movie theaters and that the trend is likely to continue into the second half of the year.
2. Balance Sheet Updates
One thing investors can expect from the AMC earnings report is a stronger balance sheet. “The movie theater chain announced that it bought $72.5 million of its 10% second lien subordinated secured notes for roughly $50 million,” reported InvestorPlace writer Eddie Pan. “These notes were due in 2026 and purchased through the open market. The repurchase represents a ‘31% discount to the face value of the debt.’” As Pan also noted, this meant a reduction of AMC’s annual interest expense. Aron described it as another step along the company’s “recovery glidepath.”
This maneuver provided the company with the opportunity to explore further acquisitions. Pan noted it didn’t seem likely AMC would try to acquire other companies after purchasing a significant stake in Hycroft Mining (NASDAQ:HYMC). But AMC knows its investors will want updates on what it plans to do now that it has strengthened its balance sheet. A new deal would be the type of catalyst that could help AMC stock recover some of the ground it has lost over the past six months. Investors should be watching carefully for updates from Aron during the AMC earnings call.
3. Uber Eats Partnership Update
July also brought another important catalyst for AMC stock. The company announced a partnership with Uber’s (NYSE:UBER) Uber Eats to help provide movie theater snacks to viewers at home. Aron first announced the news on Twitter (NYSE:TWTR) on July 9:
“Yet another promise kept. We now partner with Uber Eats. A pilot test to deliver movie theatre treats, especially AMC Perfectly Popcorn, to the home. It is now live at AMC theatres in Chicago and Kansas City. If it works, we will roll it out all across the U.S. in the fall.”
The important part of that tweet is the final sentence. If the initiative has proven successful, AMC will expand it within the coming months. The earnings call should provide the update on the partnership that AMC stock investors have been waiting for. If Aron reports that the deal has been successful, it will be extended across the country and AMC stock may rise as a result. The company hasn’t provided any major updates on the initiative since then, but that doesn’t mean it hasn’t worked. Regardless, the earnings call will bring an update on it.
On the date of publication, Samuel O’Brient 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.