Shares of AMC Entertainment (NYSE:AMC) stock are up by about 20% this month, driven by the successful releases of Barbie and Oppenheimer and the company’s second-quarter earnings. From July 21 to July 27, AMC experienced its “best week ever” based on surging admissions revenue that saw 65 separate AMC theaters record their highest-ever box office weeks since inception.
During the second quarter, AMC reported $1.347 billion in revenue, up by 15.6% year-over-year (YOY). The company also managed to collect net income of $8.6 million, compared to a net loss of $121.6 million a year ago. As of June 30, the movie theater chain had $643.4 million in liquidity, which includes $208.1 million of unused capital from a revolving credit facility.
“Following an impressive start to the year in the first quarter of 2023, the second quarter yet again showed great progress,” said CEO Adam Aron. “AMC saw more than a 12% growth in attendance, a 15% growth in total revenue and a 71% increase in Adjusted EBITDA compared to the second quarter of 2022.”
CEO Adam Aron Urges APE to AMC Stock Conversion
On July 23, Aron posted an open letter to X, the company formerly known as Twitter. The letter, which has a sobering tone, reflects Aron’s message in his earnings comments:
“Even with our $643 million of quarter-ending liquidity, our ability to continue to raise capital and remain agile are absolutely vital to maintaining our strong recovery trajectory. There are real and potentially severe liquidity hurdles on the horizon that we will need to overcome.”
In the letter, Aron warns that AMC risks the chance of running out of cash by 2024 or 2025 if it is unable to raise equity capital. He echoed this in a post that raised the issue of liquidity concerns:
Reading my Twitter feed: some of you do not get the nuance of our situation. AMC is killing it at the box office right now, so hopefully by 2024/2025, COVID-19 will just be a bad memory. But we face liquidity challenges before then. My recent Open Letter risks are real.
— Adam Aron (@CEOAdam) August 7, 2023
As of now, AMC is currently awaiting word from the court on whether or not its status quo order is still active. The status quo order blocks the conversion of AMC Preferred Equity (NYSE:APE) into AMC stock. AMC attorney Kevin Gallagher has asked to court to make up its mind by this month given “AMC’s current financial situation, and the general pattern of late-summer capital markets activity.”
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.
