The lack of blockbuster content this year is putting further pressure on AMC’s revenue. However, the company has enough stockpile to ride through this tough times.
On Wednesday, October 12, the stock price of AMC Entertainment touched a new 52-week low amid multiple concerns. The movie theater company is feeling the pressure of a high debt load. In addition, a light blockbuster schedule and stock dilution are additional factors.
So far in 2022, AMC Entertainment (NYSE: AMC) stock has tanked by more than 80% and is currently trading under $6. The company came out of the clutches of bankruptcy last year in 2021. Thanks to retail investors who turned AMC into a meme stock.
Over the last year, AMC has been working on several plans to raise the capital to pay down its debts, invest in acquisitions, theatre upgrades, and much more. Currently, AMC also issued a dividend to all common shareholders in the form of preferred shares called APE. However, as per analysts, AMC Entertainment couldn’t capitalize on selling these new shares before investors started pulling off. Alicia Reese, an analyst at Wedbush said:
“AMC could have capitalized on that, if they had moved very quickly,. And if they had sold enough shares to wipe out their debt balance, they could have done that. They would have lost all of their retail shareholders pretty quickly, but then they would have been a bit more attractive, fundamentally, even though the share count would have been pretty massive.”
Eric Handler, media and entertainment analyst at MKM Partners told CNBC that AMC still has enough cash on its hands to pull off for a couple of years. As of the quarter ending June, AMC had more than $1.17 billion in available liquidity. But Handler added that even at this depressed price, the AMC stock is overvalued. On Wednesday, October 12, the AMC stock tanked by 4.41% ending the trading session at $5.85.
Lack of Blockbuster Content
Another thing that’s severely impacting the revenue of AMC Entertainment is a lack of blockbuster movies coming over the last few months. Before the end of this year, there were only four “blockbuster” category movies coming to theatres.
This includes Warner Bros. Black Adam (Oct. 21), Disney’s Black Panther: Wakanda Forever” (Nov. 11), “Strange World” (Nov. 23), and “Avatar: The Way of Water” (Dec. 16.).
The good thing is that audiences have been returning to cinemas as the pandemic subsides and are willing to spend more than ever on tickets and popcorn. But Handler believes that AMC would be able to ride off this shortage of content due to its significant stockpile. “You need your dry powder to guard against any type of disruptions. I think they can limp along for many years with their current balance sheet,” he added.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
