AMC shares fell by 6% due to lower box office forecasts
2023.03.01 13:02
AMC shares fell by 6% due to lower box office forecasts
By Ray Johnson
Budrigannews.com – After the company’s results highlighted concerns that theater attendance would not soon return to pre-pandemic levels as rising cost of living bites, AMC Entertainment Holdings Inc.’s shares fell 6%.
Despite the release of big-budget films like “Avatar: The Last Airbender,” the world’s largest chain operator saw a 17 percent drop in foot traffic in its theaters during the fourth quarter. The Water’s Way” The quarter saw a 15.4% drop in revenue.
Sophie Lund-Yates, an analyst with Hargreaves Lansdown, stated, “The market is punishing the shares for that fact that this is AMC’s fourteenth consecutive quarter loss.”
At a post-earnings conference call on Tuesday, AMC CEO Adam Aron stated that while more people are returning to movie theaters, Hollywood has been releasing fewer films “of late.”
Aron stated, “By no means are we out of the woods yet.”
The company said that in 2019, box office collections in the United States and Canada exceeded $11 billion. However, since the COVID-19 pandemic, collections have drastically decreased, with 2022 box office collections coming in at $7.4 billion.
The box office for 2023 is expected to be 24% lower than it was in 2019. However, AMC stated that it does not anticipate a return to pre-pandemic box office levels until 2024 or 2025 at the earliest.
Lumley added that major franchises like “Marvel” and “Star Wars” have seen relative declines in performance compared to releases in previous years.
Lund-Yates stated that since the pandemic, streaming has become the preferred method of movie viewing, and she added that theater owners are feeling the effects of rising living costs.
Nonetheless, AMC stated that it would continue to raise cash in order to pay off its approximately $4.95 billion debt. Over the past year, it generated approximately $314 million in gross cash proceeds.
According to Thomas Hayes, chairman of investment firm Great Hill Capital, “AMC will have to continue to raise capital by diluting the equity holders to pay down debt – until pre-pandemic theater traffic returns – if ever.”
