AMC’s Losses Are Shrinking. The Stock Is Rising Again.
By Connor Smith
Updated Aug. 9, 2021 4:49 pm ET / Original Aug. 9, 2021 12:21 pm ET
AMC Entertainment Holdings cut its net loss to $344 million in the June quarter. Shares were rising in extended trading Monday after the movie theater firm’s results topped estimates.
AMC’s net loss at 71 cents a share was slimmer than the 94 cents a share analysts had anticipated, according to FactSet. It was down from a $1.42 per-share net loss in the first quarter, and a loss of $5.36 a share in the second quarter of 2020. The company also reported revenue of $444.7 million, ahead of expectations for $382 million, up from $148 million in the first quarter and $19 million amid the theater shutdowns in the second quarter of 2020.
Shares of AMC (ticker: AMC) were up 8% to $36.55 in after-hours trading. Prior to the report, options markets implied a post-earnings move of about 10% in either direction. The stock has averaged a move up or down of 8% following the past four quarterly earnings reports.
AMC CEO Adam Aron said the company raised $1.25 billion, before commissions and fees, in stock during the quarter. The company ended the quarter with $2 billion in cash and undrawn revolving lines of credit.
“We believe this gives AMC financial staying power to navigate boldly amidst coronavirus waters,” Aron said. “And by June 30, substantially all of our theatres were open again to entertain and delight our guests. Thanks to increased vaccination counts in the countries we serve, we started to see rising movie going demand, and we safely welcomed more than 22 million guests back to our theatres across the globe during the course of the second quarter.”
AMC stock is up 656% in the past 12 months and 1,494% year to date. That said, the stock has shed 53% from its peak levels in June. The company’s shares initially surged in January amid a broader rise in highly shorted stocks popular on social media, such as GameStop (GME).
AMC and GameStop are so-called meme stocks, meaning their daily moves can be erratic due to nonfundamental factors like short seller activity, social media sentiment, and options volume. AMC led a resurgence in meme stocks in May and early June, though the shares have fallen in recent weeks.
The company scheduled a conference call for 5 p.m. EDT. On the agenda are questions submitted by retail investors.
You’d need to make bold assumptions about the future of entertainment to justify owning the stock at recent levels. The mean analyst price target on FactSet is $5.25 a share, implying 84% downside. On the flip side, AMC hasn’t traded on fundamentals for some time. The earnings report could attract new short sellers, as well as renewed interest in meme stocks on social media.
Write to Connor Smith at connor.smith@barrons.com
