It's been a rough run for AMC Entertainment Holdings(NYSE: AMC) since CEO Adam Aron's ill-advised decision to create and spin off AMC Preferred Equity(NYSE: APE) over the summer. AMC stock closed at $18.20 on Aug. 19, the trading day before what was effectively a 2-for-1 stock split. The combined value of the two shares has plummeted 60% to $7.22 less than three months later. If you were unfortunate enough to buy AMC at its peak in early June of last year, you would be down more than 90% today.
AMC shareholders are hungry for a break, and they could get one this week. Black Panther: Wakanda Forever hits theaters on Thursday night, and it's a lock to be the country's second highest-grossing film of 2022. More importantly, AMC itself reports financial results on Tuesday. There will be a lot of eyes on AMC Entertainment stock this week.
Tuesday afternoon's quarterly report won't be perfect pitted against where the leading multiplex operator was before the pandemic. The industry's domestic box office receipts for the third quarter were nearly 32% below where they were for the same three months in 2019. Smaller rival Cinemark(NYSE: CNK) announced its third-quarter results last week, posting a 21% decline in revenue from where it was three years ago.
Investors walked away generally pleased with Cinemark's numbers, sending the shares 8% higher in an otherwise sinking market. AMC didn't climb in sympathy, falling 13% for the week. The 21% gap in performance between the two stocks is something to keep in mind, as what's good for Cinemark could be even better for AMC shareholders this week.
Analysts see $961.1 million in revenue for AMC's third quarter, a 27% slide from where it was in the same summertime quarter in 2019. That's a much bigger drop than what Cinemark just delivered, but it doesn't seem warranted. Cinemark and AMC landed fairly close last time out, 22.3% to 22.5% behind their second quarter results from 2019. In short, a top-line beat could be in the works.
The bottom line will be a mess, but that's already discounted here. AMC is a couple of years away from profitability, barring a multiplex renaissance. It should also be noted that Cinemark moved higher last week despite posting a larger-than-expected loss. No one is buying or selling AMC as a bottom-line story, even if AMC's survival since the COVID-19 crisis hit has come at the expense of extreme dilution.
The current quarter is faring even worse for exhibitors, with period-to-date ticket sales clocking in 43% lower. You can be sure that Aron will pivot, hyping up upcoming releases including Wakanda Forever and the first of several Avatar sequels bringing patrons back to the local cinema during the potent holiday season.
These are trying times for movie theater stocks. The past couple of months have been brutal for AMC shareholders, but help -- in the form of fresh financials and a healthy pipeline of potential blockbusters -- is finally on the way.
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