AMC’s Hype Machine Can’t Fix Cinema’s Broken Economics

shares of AMC (AMC) It was trading at around $18 just before the company decided to issue a new class of preferred stock to existing investors in late August. hope is, So-called apes who are fans of AMC upon WallStreet Bets on Reddit Subreddits and other social media sites eat up both inventories like cartons of buttery popcorn.
AMC even created a ticker for its new stock “Ape” In honor of Reddit followers.

However, since AMC split into two shares, the combined value of AMC and APE has hovered near $14. (AMC is trading around $8.60 and APE is around $5.20) Do the math and it’s down nearly 25% over the past few weeks. The price of AMC 1 share and APE 1 share is also about 50% lower than where AMC shares started in 2022.

what happened? The hype from AMC CEO Adam Aron seems unable to overcome the fact that theaters are in dire financial straits.

AMC’s rival Cineworld owns the US-based chain Regal, I just filed for bankruptcy. Shares of other cinema owners such as Cinemark (CNK), imax (imax) When Marcus (MCS), all down about 10% to 15% this year. is almost consistent with of the S&P 500 16% drop.
It is certainly true that AMC is now in a better financial position than its competitors. AMC reported on its balance sheet at the end of the second quarter that it had $1.17 billion in cash and other liquidity. Aron proudly pointed out in a tweet Wednesday following the news of Cineworld went bankrupt.

“Cineworld/Regal has filed for Chapter 11 of the Theater Bankruptcy Protection Act in the US and UK. Fortunately, AMC is in a very different situation. Thank you retailers for letting me source them! Thank you so much! You saved AMC,” Aaron wrote.

Moviegoers are also willing to hit the theaters for some truly massive blockbuster movie events, including the highly anticipated sequel to Top Gun, the latest installment in Jurassic World and the Marvel franchise, and children’s animated films. is. The U.S. box office has bounced back from the lows of 2020 and his 2021.

'Top Gun: Maverick' isn't the blockbuster Hollywood has seen in years
But theaters now face stiff competition from streaming video. Hollywood is shifting more movies to platforms like Disney+. netflix (NFLX), Paramount+, comcast (CMCSA) Owns Peacock and HBO Max, and like CNN, Warner Bros. Discovery.
The studio also provides these services and Amazon’s (AMZN) prime video, Apple TV+ (AAPL) Hulu is also managed. disney (DIS).

Add all that up, and it’s not hard to see why AMC remains in a somewhat precarious financial position. The company is expected to report a loss of about $638 million this year. However, in 2021 he’s down from a loss of nearly $1.3 billion. Also, sales are expected to see him jump nearly 70% to $4.3 billion.

However, AMC is taking bold steps to boost its sales (and stock price) even further. The company is now Selling specialty popcorn outside the movie theater Through partnerships with retailers. AMC also made a bold move Invest in gold and silver mining companies Earlier this year.
At the time, Aron spoke of his decision to buy the shares. highcroft mining is an example of AMC “thinking creatively and boldly about our future,” and Hycroft “just like AMC a year ago…it has solid assets, but it has a lot to offer.” We are facing serious and imminent liquidity problems for a number of reasons.”

But others in the industry seem to envy the fact that AMC has become a pop culture phenomenon.

Of course, Cineworld welcomed the liquidity of being a “memetic stock” like AMC, but we were never so lucky! said in the company’s bankruptcy filing:

It could be just sour grapes or old popcorn.

You can’t blame Aron and AMC for throwing their hands up and doing nothing to counter the fact that the economics of the movie theater business have arguably changed forever. Whether that means a rebound in stock prices is another question entirely.


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