AMC Entertainment (NYSE:AMC) stock rose 4% after beating earnings estimates.
The company lost about $235 million, 13 cents per share fully adjusted, on revenue of $954 million for the quarter. But U.S. attendance was up 25%, and global attendance reached 47.6 million. Analysts had expected a 17 cent/share loss and revenue of $937 million.
In pre-market trading today, May 5, AMC stock was selling for $6.15 per share, a market capitalization of about $4.5 billion.
Fight for Survival
AMC CEO Adam Aron still faces two challenges.
He needs to get his settlement approved against shareholders protesting his converting preferred APE (NYSE:APE) shares into common stock at a discount. APE shares rose 5% overnight on the earnings, trading at $1.64 each early on May 5.
Aron must also hope that the writers’ strike that began this week concludes before it stops movie production. The previous strike was in 2007 and lasted for 100 days. It pushed many films, including blockbusters, into late 2008.
Aron got AMC through the pandemic through stock sales. The company now has 10 times more shares outstanding than it did before the pandemic. Converting APE shares to common stock will increase that further.
In his earnings report, however, Aron insisted better days are ahead. He noted the success of The Super Mario Brothers Movie and said: “The remainder of the year promises something for everyone.” He also noted that concession revenue is increasing at a double-digit rate.
Before the pandemic, AMC was averaging revenue of $5.6 billion per year. It’s currently on track for about $4 billion in revenue. He promises that, as with airlines and hotels, meeting the fixed operations costs will leave a residual profit if enough seats are filled.
AMC Stock: What Happens Next?
AMC has a monopsony over Hollywood, as it’s the only major distribution channel standing other than streaming. Aron has gotten through the pandemic with one of the most audacious executive acts in recent history, encouraging small traders to buy against shorts and pushing non-fungible tokens (NFTs).
He’s not out of the woods yet, but that day may be getting closer.
On the date of publication, Dana Blankenhorn 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.
