Shares of AMC (NYSE:AMC) stock are heating up ahead of a catalyst tomorrow. On Sept. 3, AMC will participate in National Cinema Day and offer movie tickets for just $3. The special discount seeks to increase theater traffic over the Labor Day Weekend, which has historically been a slow weekend for ticket sales. Over 3,000 theaters, which host more than 30,000 screens, will participate in the event.
The domestic box office has collected $3.3 billion in ticket sales this summer. However, sales are still 20% lower compared to pre-pandemic numbers in 2019. On top of that, theater exhibitors have had 30% fewer wide releases this year.
This year, National Cinema Day will be the first of its kind on a large scale in the U.S. Cinema Foundation President Jackie Brenneman added: “We’re doing it by offering a ‘thank you’ to the moviegoers that made this summer happen, and by offering an extra enticement for those who haven’t made it back yet.”
AMC Stock Fans Prepare for National Cinema Day
According to Movie Theater Prices, the average cost of a ticket for an individual over the age of 13 is $13.69. The average cost of a ticket for children between two and 12 is $10.69. So, unless demand increases by 200% to 300%, National Cinema Day is unlikely to provide AMC with a major boost in sales. What the event can do, however, is drive traffic from hesitant moviegoers. If these hesitant customers are swayed to visit theaters even more after the first visit, then the event can be booked as a success in the eyes of AMC. Of course, reduced ticket prices serve as a con, but potential increased demand should offset this.
Meanwhile, MKM Partners analyst Eric Handler reduced his AMC price target to 50 cents from $1.50 today. Handler characterizes AMC’s capital structure as “upside-down,” citing a massive dilution of shares since the pandemic. Since then, shares outstanding have increased by 400% to over 1 billion, while the company has taken on $5.5 billion of debt. The analyst also explains that movie theater sales have slowed in August and should remain low until late October. Finally, Handler lowered his box office industry forecasts for Q3 and Q4 and believes that sales growth for 2023 is at risk.
On the date of publication, Eddie Pan did not hold (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.
