AMC Entertainment Holdings (AMC), the movie theater giant, has been the star of its own dramatic plot. It began when the film industry came to a halt in the days of the pandemic lockdowns and went into a wild ride as if it sat on one of its 4RDX interactive seats. Just look at AMC stock, which slid 98% in the last three years, including the sudden drastic surges upward thanks to the meme stock craze, the last being at the end of April and the beginning of May.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
From the outside looking in, AMC, like GameStop (GME), seems caught in a battle between institutional and retail investors. The former are trying to short the stock, and the latter see themselves as anti-establishment fighting for the little people (although neither AMC nor GameStop are little).
Short sellers haven’t given up yet, with 17% of AMC shares currently of short interest, while retail investors, like the die-hard fans of some movie franchise, want to see a sequel, meaning they don’t want to see it close and file for bankruptcy. Or they just want to stick it to the establishment.
Nevertheless, AMC has shown resilience and adaptability despite this ongoing saga. One example is taking advantage of the meme surge to raise a meaningful capital of $2 billion through issuing shares, which gave them a breather and helped the company’s strategy for deleveraging its enormous debt of $8.67 billion, worth more than six times its market cap.
After writing all the above, we are still talking about the biggest player in the film theater industry, which owns over 900 movie theaters and operates 10,000 screens. These facts can go either way; the bigger your business, the bigger your problems. However, the bigger you are, the more leverage you can attain. Yet, one of its biggest challenges in this day and era is to get people to come back to watch movies in theaters instead of streaming at home. In many aspects, it resembles the 1950’s when cinema venues had to battle the fast-growing TV industry.
As we approach the Q3 2024 earnings report scheduled for November 12, let’s briefly examine three key talking points highlighting AMC’s journey in the last year and its near-term prospects.
- Last Year’s Financial Performance: AMC’s financial performance in 2023 and 2024 was challenging. In Q3 2023, the company lost $0.43 per share and earned $1.04 billion in revenue. Despite these difficulties, AMC used its strong brand and loyal customers to stay above water. The company has managed to raise funds by stock trading and working on cutting costs and managing debt, all helping the company stay on route.
- Expected Results for Q3 2024: Turning to the present, the outlook for the fast-approaching Q3 earnings call appears more promising. Analysts expect AMC to report a loss of just $0.01 per share, a significant improvement from previous quarters. Revenue is forecasted to be around $1.04 billion, slightly above analyst estimates. This positive shift is attributed to the success of recent concert film releases, such as Taylor Swift’s “The Eras Tour” and Beyoncé’s “Renaissance.” These events have boosted ticket sales and increased food and beverage revenues, showcasing AMC’s ability to swim back to safe waters.
- Operational Targets and Strategic Goals: Looking ahead, AMC has set ambitious operational targets to ensure long-term growth and stability. The company plans to enhance the theater experience with upgraded seating, food and beverage options and expanded digital services. Additionally, AMC aims to acquire new theater locations and invest in premium large-format experiences to attract more moviegoers. These strategic moves are designed to solidify AMC’s position as a leader in the entertainment industry and hopefully drive future profitability.
AMC Price Target on Wall Street
On Wall Street, AMC stock is a Moderate Sell, with Zero Buys, Two Holds, and Three Sells. The average price target for AMC stock is $3.73, reflecting a downside of 14.25%.
Final Thoughts
It is clear that AMC doesn’t intend to go quietly into the night but rather go full throttle, as if it were one of the protagonists in a classic movie. While AMC has faced its share of challenges, its proactive measures and strategic initiatives have positioned it for a better future. As we await the Q3 2024 earnings report, there is a sense of optimism that AMC will continue to recover and grow, which will become (if successful) a classic comeback story.
