AMC Entertainment Q3 preview: Where next for the AMC share price?
Joshua Warner November 4, 2021 10:37 AM
AMC is hoping to start generating cash again before the end of the year and momentum is building following record ticket sales in October. We explain what to expect from the earnings and consider how AMC shares could react.
When will AMC Entertainment release Q3 earnings?
AMC Entertainment is scheduled to release third quarter earnings after US markets on Monday November 8.
AMC Q3 earnings preview: what to expect from the results
Although many businesses have started down the road to recovery as restrictions have eased this year, the ability to bounce back has been pressured by resurging Covid cases. For AMC, its revival has had the added element of being reliant on the studios releasing blockbuster titles in order to get audiences back in theatres.
Although the film slate remains highly sensitive to the evolving nature of the pandemic, the cinema industry has finally had some big-name titles to work with. The latest James Bond film, No Time to Die, had the most successful opening weekend than any film in the franchise’s history. Marvel’s Black Widow has been one of the highest-grossing films in the US this year despite Disney’s dual-approach with its streaming platform. And there have been other well-received titles such as the latest Venom film and Shang-Chi and the Legend of the Ten Rings.
Box office data suggests the Delta variant weighed on sales in late July and early August, but things have improved since then. AMC has already revealed that ticket sales (as well as food and beverage revenue) reached their highest level in October since February 2020, marking a post-pandemic record. That sets a mixed stage for the third quarter, but does suggest AMC and the wider industry has positive momentum heading into the fourth.
Still, while overall US box office sales were up 62% year-on-year in the third quarter, they remained less than half what was recorded in the same period in 2019 before the pandemic hit, showing the industry is still far from a full recovery.
Wall Street forecasts that AMC will report third quarter revenue of $713.3 million. That suggests this will be the strongest quarterly topline performance since the first quarter of 2020. That would be up from just $119.5 million the year before and from the $444.7 million booked in the second quarter of 2021.
Analysts expect AMC to report an adjusted Ebitda loss of $78.6 million, which would be narrower than the first two quarters of 2021 and smaller than the $334.5 million loss booked the year before. The net loss is expected to follow and narrow to $246.9 million from the $905.8 million loss last year, shrinking to a $0.50 loss on a per share basis from $8.41.
Currently, analysts believe the fourth quarter will improve further with estimates showing markets expect revenue to top $1.0 billion. The two biggest threats to the momentum are another resurgence in Covid cases prompting people to stay away from crowded spaces like movie theatres or new restrictions being introduced by governments, and any further delays to the film slate over the holiday season. We have already seen studios chop and change their schedule this year to ensure they reap maximum returns on their films and there is a chance that any changes to the Covid crisis could prompt them to push back titles into 2022. Major upcoming releases currently pencilled in the calendar before the end of 2021 includes Eternals and Spider-Man: No Way Home.
AMC boss Adam Aron, who has embraced the ‘Ape Army’ of retail investors that have sent the stock soaring, said earlier this year that the company could start generating positive cashflow again if US box office sales can hit $5.2 billion this year, but that has looked increasingly optimistic as the year has gone on. Bloomberg suggests the industry would need to sell a staggering $2.7 billion worth of tickets – more than what was achieved in the first three quarters of the year – in order to hit that goal. That suggests AMC will have to wait until 2022 to stop burning through cash unless the fourth quarter proves to be a blowout for the movie industry, and that is significant considering AMC needs cash to start paying-down its burdensome debt pile that stands at over $11 billion. AMC had over $2 billion of liquidity at the end of the second quarter, when it reported an operating cash outflow of $233.8 million.
AMC was valued at less than $500 million before finding itself at the centre of the retail trading frenzy in so-called meme stocks earlier this year, which sent the company’s valuation to as high as $31 billion in June. The stock has fallen over 36% since hitting those highs but is still worth over $20 billion today. While its faithful retail investors remain committed and believe AMC can go the moon, most believe AMC finds itself hugely overvalued following the volatile journey the share price has had this year. Brokers currently have a Sell rating on the stock and believe it is worth just $5.44 per share, some 86% below the current share price of $40.00.
Where next for the AMC share price?
The AMC Entertainment share price rose to an all-time high on June 2 of $72.62. The share price has been on the decline since.
More recently the selloff has stalled with the price trading in a holding pattern, capped on the upside by $44.50 and on the lower side by $33.50.
The price trades on the 50 sma which is flat, and the RSI is also neutral.
Traders might look for a breakout trade with buyers looking for a move over $44.50 to target $52.80, the September high.
Sellers might look for a break below $33.50 to target the 500 sma and August low around $28.19.
How to trade AMC shares
You can trade AMC shares with Forex.com in just four steps:
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.