AMC Entertainment (NYSE:AMC) and investors in AMC stock are now hoping Taylor Swift can save the theater company from the Hollywood strikes.
Why? Well, a film version of Swift’s recent concert tour — entitled Taylor Swift | The Eras Tour — is due to start playing in AMC theaters on Oct. 13. The company sold $26 million in presale tickets for the show on the first day that they were available. This beat a record previously held by Spiderman: No Way Home, which did $16.9 million on its first day of presales.
Shares of AMC stock opened at about $12.68 per share on Sept. 5 and now trade closer to $13 apiece. AMC also has a market capitalization of about $770 million. The stock traded at about $11 per share before the deal was announced.
AMC Stock: Swifties Save Us
Reportedly, Swift and her team made the deal for the film directly with AMC CEO Adam Aron after negotiations broke down with Hollywood studios. AMC is also the film’s distributor. Adult tickets to the film are selling for $19.89 apiece while children and seniors will pay $13.13 per ticket.
AMC is taking less of the box office on Taylor Swift | The Eras Tour than it would on Hollywood films. The company is hoping concessions like $14.99 collectible popcorn tubs will help make up for that.
Some studio bosses are upset about the deal. They’re having to rearrange their own release schedules to accommodate it. There’s also fear that other artists, or event producers, could take a direct route to theater distribution.
But the deal could also benefit Hollywood. Without Swift, AMC would have little to show this fall, which could have driven it and other exhibitors under. Cineworld, the owner of AMC rival Regal Cinemas, only emerged from bankruptcy last month.
Meanwhile, traders at Stocktwits have been generally bullish on news of the concert film.
What Happens Next?
Those who assumed the volatility in AMC was over after the company converted its APE preferred shares to common stock now have egg on their faces. That includes me.
Of course, some analysts still see AMC going to zero. But B. Riley recently raised its price target on AMC stock from $4.50 to $45 per share, citing the Swift deal.
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.
