Experts Weigh In On AMC Earnings: 'Still A Business That Is So Incredibly Challenged'

AMC Entertainment Holdings Inc AMC shares gained 1% on Tuesday after the company reported a smaller second-quarter loss than the market had expected.

On Tuesday, AMC reported a second-quarter EPS loss of 71 cents on $444.7 million in revenue. Both numbers exceeded consensus analyst estimates of a 91-cent loss and $382.1 million in revenue. Revenue was up sharply from $19 million a year ago but is still well below pre-pandemic revenue of $1.5 billion in the second quarter of 2019.

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AMC said that as of the end of June about 95% of AMC’s global movie theaters were back in operation. The company said it could return to profitability by the fourth quarter if U.S. domestic box office sales recover to at least $5.2 billion.

AMC reported 22 million ticket sales in the first quarter, up sharply from its 7 million ticket sales in the first quarter and well below a record 97 million ticket sales in the second quarter of 2019. AMC reported $1.8 billion in cash and $2 billion in liquidity as of the end of June.

AMC also said it plans to accept Bitcoin BTC/USD for ticket and concession sales by the end of the year.

Analysts Remain Skeptical: Credit Suisse analyst Doug Mitchelson said Tuesday that AMC’s average ticket price benefitted from price hikes and fewer matinees, while concession sales were boosted by enthusiastic returning customers. However, Mitchelson said AMC stock continues to trade at an enterprise multiple of roughly 29 times its pre-pandemic levels, and the outlook for box office sales in the second half of 2021 remains unclear.

“The Delta variant appears to be weighing on the box office, as a recent NRG survey showed that theater-going comfort levels slipped to 72% in late July from the recent high of 81% (including mothers now 59% vs prior 75%),” Mitchelson wrote.

Credit Suisse has an Underperform rating and a $1.55 price target for AMC.

Fast Money Traders Weigh In: CNBC Fast Money traders also discussed the AMC quarter and what it means for the stock in the near-term.

“I love [AMC CEO Adam Aron] so much for just doing whatever he could, but this is still a business that is so incredibly challenged,” Karen Finerman said.

Dan Nathan said the thing that's unique about AMC is that 80% of the company’s stock is owned by retail investors rather than institutions.

“If I look at it from an institutional perspective, it’s uninvestable. They were losing money in 2019 before the pandemic when their sales were more than $5.5 billion,” Nathan said.

“Retail sees something very different in this than institutions.”

Pete Najarian said AMC’s trading volume has significantly dropped off from its meme stock mania high, and he hasn’t been long the stock for a while now.

“It’s still really interesting. Yes, they’ve raised capital, but they still have an unbelievable amount of debt. They still have a huge short interest, so that is helping a little bit of that move from the memes to the upside at times,” Najarian said.

He noted that AMC is facing unprecedented competition from streaming platforms and is in a very difficult position.

“I think it’s just a really big challenging spot right now for AMC, and I’ll trade it but I’m not in it right now.”

Photo: Shruti via Flickr