Can AMC Entertainment’s share price rise after third quarter results?

AMC Entertainment [AMC] is expected to come close to profitability against a more than five-fold increase in year-over-year revenue when it releases its September quarter figures on November 8.

The performance improvement is due to the fact that the chain was able to reopen nearly 600 theaters in the United States and more than 300 around the world after the closure and reduced attendance during pandemic lockdowns.

AMC Entertainment’s share price fluctuated between $ 2 and $ 12 between March 2020 and May of this year, as lockdowns kept people at home, watching movies on streaming services such as Netflix. [NFLX].

However, as the locks were lifted, so was the AMC share price. It has also benefited from the fact that it is a “meme stock” backed by groups of retail investors on social media.

Pandemic woes could continue

Nonetheless, “AMC’s journey through this pandemic is not over and we are not out of the woods yet,” said CEO Adam Aron.

Once again, fears about the Delta Covid-19 variant persist and movie studios are threatened by producers sending new movies straight to home screens via streaming channels.

AMC has introduced new plans, such as selling its AMC Perfectly Popcorn theaters in retail stores, shopping center counters and kiosks, and direct to people’s homes starting next year to counter the threat. . He hopes to grab a share of the multibillion-dollar popcorn market, and if consumers stay home to watch more movies, then at least capture some of their spending.

“AMC’s journey through this pandemic is not over, and we are not out of the woods yet” – CEO Adam Aron

Over the past 12 months, AMC’s stock price has climbed 1,645% against its Cineplex peers [CGX.TO], which saw a 162% increase, and Cinemark [CNK] with 139%.

Can AMC Stock Price Retain Its Star Power After Q3 Results?

Back to the box office

Zacks analysts expect AMC Entertainments to post a loss of $ 0.42 per share, which is a 92.63% improvement over the same period last year and revenue of 768 , $ 63 million, up 543.21%.

Wall Street analysts estimate it will hit $ 1 billion in fourth quarter revenue.

According to City Index, AMC was helped by the screening, after much delay, of the new James Bond film – No time to die – and other strong titles like Marvel’s Black Widow “Despite Disney’s dual approach with its streaming platform”.

AMC has previously revealed that its ticket sales and food and drink sales hit their highest levels since the pandemic began in October. Overall, U.S. box office sales grew 62% year-over-year in the third quarter, but remain at half of the level reached before the pandemic.

Will moviegoers have the confidence to return to sold out theaters in the months to come, even as the pandemic continues to subside?

Analysts are cautious, not only given the uncertain consumer environment, but also AMC’s inflated valuation to $ 20 billion thanks to its push in equities itself.

According to Market Screener, the average consensus is a sale with a target price of just $ 5.44. Wedbush analyst Michael Pachter recently downgraded his rating from Neutral to Underperforming. He is one of those worried about valuation, saying that “the ultimate majority of retail owners will eventually take it and move on.”

However, he is confident about film demand and describes the industry’s fourth quarter box office sales as encouraging.

The light at the end of the tunnel

In the second quarter, AMC posted earnings per share of $ -0.71 compared to analysts’ expectations of a loss of $ -0.91. Its revenue was $ 444.7 million, compared to a forecast of $ 382.1 million.

It said 22 million people visited its theaters, up from 7 million in the first quarter but down from 97 million in the pre-pandemic second quarter of 2019.

AMC CEO Aron said, “We’re not doing a winning lap… We’re always losing money; we are still burning money. But we can see a light at the end of the tunnel.

“We’re not doing a victory lap… we’re always losing money; we are still burning money. But we can see a light at the end of the tunnel “- Adam Aron

In search of growth

Analysts will be looking at box office numbers and cash flow to see if the recovery continues to take hold at AMC.

Emphasis will also be placed on the threat of so-called hybrid film releases which are shown not only in theaters but also at home via streaming services.

Finally, analysts will be delighted to discuss AMC’s diversification plans, such as its popcorn ambitions, the delivery of pre-recorded sports and concerts, as well as accepting Bitcoin to pay for the tickets.

Take a seat for the next AMC share price projection.