Movie theater chain AMC Entertainment (AMC) reported third-quarter earnings after the close on Monday that beat expectations, and the company said it was “encouraged” by trends so far in the fourth quarter.
Still, AMC stock was down early Tuesday. The chain reports as it tries to ride the economy’s reopening and a wave of retail investor enthusiasm against analyst concerns about business fundamentals.
AMC lost 44 cents per share during the quarter. That wasn’t as bad as the 53 cents per share forecast by FactSet.
Revenue came in at $755.6 million. The figure was above the $708 million expected.
“Thanks to an increasingly appealing film slate, rising COVID-19 vaccination counts, our commitment to robust health and safety protocols and our own greatly increased marketing activity, AMC’s theatres in the U.S., Europe and the Middle East safely welcomed back 40 million guests during the third quarter of 2021,” CEO Adam Aron said in a statement.
AMC said it had liquidity of more than $1.8 billion at the end of the quarter, including cash and undrawn credit lines.
The company said it doesn’t expect to borrow under those credit lines over the next 12 months. It had free cash flow of negative $138 million during the quarter.
Movie theaters have suffered over the years as at-home viewing becomes more popular and as the window shrinks between a film’s theater release and its streaming release. The onset of the coronavirus pandemic meant they had to contend with shutdowns and service restrictions.
Aron, in the company’s earnings release, said “substantially all” of its theaters worldwide were open for the whole quarter. That was a first since the fourth quarter of 2019.
In September, Macquarie Research, in a research note on AMC stock, also raised questions about the theater chain’s leverage, cash flow, box-office trends and underperformance of nonblockbuster films set for release this year.
Macquarie, at the time, said AMC has deferred rent of $420 million in Q2, on top of its annual rent expense of $1 billion.
Rent costs during the third quarter stood at around $215 million.
AMC stock fell 4.9% to 42.85 in premarket trading. Shares rallied 8.1% in Monday’s stock market trading, rebounding from their 50-day line.
The stock had a Composite Rating of 83. Its EPS Rating is 50.
AMC stock was one of the first to be sucked up into this year’s meme-stocks craze, which initially targeted GameStop (GME) and other highly shorted companies. Shares of AMC surged in January and June, before giving up gains.
AMC Stock Analysts Wary
AMC has tried to take advantage of the explosions in its share price. And the chain has tried to more enthusiastically engage its retail shareholders.
AMC has sold shares, raised money, paid off debt and started expanding again in Europe and the Middle East, Wedbush analyst Michael Pachter said in a research note last week. Still, he downgraded AMC stock to underperform. And he said he believed “the majority of retail ownership will eventually cash out and move on.”
Still, AMC said that October’s theater ticket sales were the highest since pandemic-related shutdowns began last year. The company last month also called out strong weekend turnout for movies like “Venom: Let There Be Carnage” and “No Time to Die.”
“You know my thoughts on ‘sages’ predicting demise of cinemas: Choke on that, baby, #CHOKEonTHAT,” Aron said on Twitter in conjunction with a press release announcing the strong showing for those films.
Leverage, Cash Flow, Bitcoin
Aron has said that 365,000 people had joined its AMC Investor Connect communications and rewards program for holders of AMC stock — with offers of free popcorn for new and existing members.
The theater chain recently said it would accept Bitcoin for online ticket and concession payments by the end of the year. It will also accept online payments in Ethereum, Litecoin and Bitcoin Cash. In October, Aron said on Twitter that customers could buy digital gift cards with Dogecoin and other cryptocurrencies using a BitPay wallet.
In response to a Twitter poll posted on Aron’s feed late last month asking if the company should take the Shiba Inu coin as well, 81.4% respondents voted “Yes Shiba Inu for Sure.“
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Meme Stocks: AMC Earnings Beat As Analyst Predicts Eventual Retail Cash-Out