Why AMC Shares Surged After-Hours Despite Massive Q3 Net Loss

Movie theater chain AMC Entertainment Holdings Inc AMC shares surged in the after-hours session Monday even as the company reported massive losses in its third-quarter.

What Happened: The surge came as the company disclosed that, as of October, theatres in about 539 out of 600 domestic locations in the U.S. and approximately 261 out of 358 international locations had reopened.

The company reported that its theaters in European locations like Italy, Germany, Spain, and the United Kingdom will remain closed due to a resurgence in COVID-19 infections.

AMC reported total revenue of $119.5 million, down 90.9% from the $1.32 billion revenue posted in the same quarter a year ago. This nevertheless fell above the $84 million revenue forecasted by analysts polled by FactSet.

Net loss per share was at $8.41 for Q3, missing FactSet analyst consensus of $4.86 per share, as reported by MarketWatch.

Earlier in the day, AMC revealed in a filing with the U.S. Securities and Exchange Commission that it was looking to sell up to 20 million class A shares to secure $47.7 million in the capital in an offering, as a part of its At-The-Market (ATM) equity program. The company's shares tanked in the regular session following the news, dropping 8.5% as of the day's close.

Why Does it Matter: In mid-October, the theater chain was grappling with a potential bankruptcy scenario due to a liquidity crunch and months of closure. At the end of Q3, the company reported a cash & cash equivalents balance of $417.9 million and a negative free cash flow of $385 million during the quarter.

In July, it made changes to its capital structure through a debt exchange offer, reducing $555 million in principal amount. The ATM equity program in September raised approximately $56.1 million.

Price Action: AMC gained 3.26% during the after-hours session at $2.22 per share.

Photo by AMC Theaters on Wikimedia