AMC Entertainment Holdings Inc. is set to release its second-quarter results on August 8, facing both positive box-office trends and challenges in the form of Hollywood strikes and a stock-conversion battle. Despite these obstacles, industry experts are optimistic about the future of theatrical exhibition.
Strong Box-Office Performance
According to a recent statement by AMC, the company experienced its best week ever in terms of admissions revenue from July 21 to July 27. This achievement resulted in a new record for U.S. theaters and global theaters alike. In fact, 65 U.S. locations, including 13 within the greater Los Angeles market, also set single-week box-office records.
Wedbush analyst Alicia Reese predicts that AMC will continue to thrive, thanks to its extensive network of premium large format screens. Reese expects the North American box office in 2023 to surpass 2022 figures by 20%, which translates to approximately 78% of the 2019 box office. Furthermore, she believes that AMC will maintain or increase its current market share during this time.
Challenges Ahead
While AMC enjoys its recent success, it cannot overlook the potential impact of ongoing labor strikes. CEO Adam Aron acknowledged this issue in a recent tweet, expressing concern about the uncertainty created by the writers’ and actors’ strikes. Additionally, Aron mentioned that liquidity remains tight for the company.
Positive Outlook
Despite these challenges, Reese remains optimistic about AMC’s second-quarter results. She expects positive commentary regarding the company’s successful runs of films like “Barbie” and “Oppenheimer” in both domestic and European markets. Furthermore, Reese believes that AMC will provide an overall optimistic view of its ability to navigate any negative effects caused by the labor strikes if they conclude within the next one to two months.
In summary, AMC Entertainment Holdings Inc. is expected to report strong second-quarter results amid favorable box-office trends and ongoing challenges. The company’s ability to adapt and overcome obstacles will be closely watched by both investors and industry experts alike.
AMC Faces Stock-Conversion Battle as Debt Elimination Efforts Continue
The ongoing battle to eliminate debt for AMC Entertainment Holdings, Inc. (AMC) has encountered another hurdle. Last month, a Delaware judge rejected a settlement that would have allowed the company to convert its AMC Preferred Equity (APE) units to common stock. As a result, AMC will need to find an alternative solution or issue a significant number of additional APE shares to meet its upcoming cash requirements.
If AMC fails to convert APE shares, it will face dilution in its overall outstanding share count. Currently, AMC shares are trading at approximately three times the price of their APE counterparts. Wedbush analyst Alicia Reese predicts increased volatility for both AMC and APE shares while the judge reviews the modification AMC has submitted. In the meantime, AMC’s CEO Adam Aron will be working to persuade shareholders to act in the best interest of the company.
Regardless of the court’s final decision, Wedbush expects AMC to continue raising cash through equity offerings and gradually reducing its substantial debt balance. As of the end of 2022, AMC’s debt stood at $4.949 billion, which was $220.1 million lower than the previous year.
Wedbush maintains its underperform rating for AMC with a price target of $2. According to analysts surveyed by FactSet, three analysts have a hold rating and five analysts have a sell rating for the company. The expected second-quarter financial results for AMC include a projected loss of 4 cents per share and revenue of $1.287 billion.
Despite these challenges, AMC’s stock has shown resilience, posting a 20.8% gain in 2023, outpacing the S&P 500’s gain of 17.5%. Similarly, APE shares have performed well, experiencing a 28% increase year-to-date.
