AMC Entertainment Plans Expansion Into Popcorn Market; Shares Pop

Movie exhibition firm AMC Entertainment Holdings, Inc. (AMC) has announced plans to expand its business and enter the multi-billion dollar popcorn market. Shares of the company closed 4.1% higher on Friday. The stock gained another 0.1% in extended trade to end the day at $41.75.

Headquartered in Kansas, AMC runs nearly 950 theatres and 10,500 screens across the world. In the U.S., it is mainly present in New York, Los Angeles, Chicago, Atlanta and Washington, D.C. Internationally, the company has operations in the U.K., Germany, Spain, Italy, Ireland, Portugal, Sweden, Finland, Estonia, Latvia, Lithuania, Norway and Denmark.

Plan Details

AMC plans to sell its AMC Theatres Perfectly Popcorn via four new platforms. The company has been selling popcorn in theatres since 1920.

Starting next year, AMC Theatres Perfectly Popcorn will be available at select retail locations in malls across the U.S. The company plans to open five ‘AMC Theatres Perfectly Popcorn’ stores in the first half of 2022, and end the year with a total of up to 15 locations.

Apart from the traditional and gourmet-flavored popcorn, these kiosks, counters or stores will also offer other AMC movie theatre treats like candy, Coca-Cola (KO) Freestyle options and bottled water.

Not only this, AMC Theatres Perfectly Popcorn will be available through food delivery mobile services for home delivery from nearby theatres. The company also plans to offer ‘To Go’ packages of freshly popped popcorn for pickup and/or takeout at its theatres.

Later in 2022, prepackaged, microwaveable AMC Theatres Perfectly Popcorn will be available in supermarkets and convenience stores around the country. (See Insiders’ Hot Stocks on TipRanks)

Management Comments

The Chairman and CEO of AMC, Adam Aron, said, “With this new AMC initiative, we expect to reach entirely new segments of the U.S. population with our popular AMC Theatres Perfectly Popcorn. For AMC Entertainment, this is an opportunity to diversify our business and to create a new revenue stream for our company, all the while delighting popcorn lovers whether they are in our theatres, are on the go, or find themselves in the comfort of their own homes.”

Wall Street’s Take

Recently, Wedbush analyst Michael Pachter downgraded the rating on the stock to Sell from Hold but retained the price target of $7.50 (82% downside potential).

Analyst Recommendation

Overall, the stock has a Moderate Sell consensus rating based on 2 Holds and 2 Sells. The average AMC Entertainment Holdings price target of $11.75 implies 71.8% downside potential. Shares have gained 1,974.6% year-to-date.

Risk Analysis

According to TipRanks’ Risk Factors tool, AMC is at risk mainly from one factor: Finance & Corporate, which accounts for 50% of the total 28 risks identified for the stock. Under the Finance & Corporate risk category, the company has 14 risks, details of which can be found on the TipRanks website.