AMC jumps on expectation-beating second-quarter results
‘Meme stock’ cinema chain to accept bitcoin payments
AMC Entertainment Holdings stock jumped in pre-market Tuesday trading after the world’s largest cinema chain reported better-than-expected second-quarter earnings. Instead of the 94 cents per share loss expected by analysts, the company reported a loss per share of 71 cents.
Although AMC still operated at a loss, the $444m (£320m) in revenue generated in the three-month period buoyed investor sentiment.
Not only did it represent a marked improvement from the $19m generated in the second quarter of 2020 when the COVID-19 crisis devastated the film industry, but it also beat the $382m predicted by Wall Street.
Sceptics may well point to the shift in viewing habits engendered by the crisis as a cause for concern. Furthermore, the AMC’s second-quarter revenue still stands well below the $1.5bn it enjoyed in the same period of 2019.
Company capitalises on ‘Meme stock’ status
Throughout 2021, however, there has been scant correlation between the company’s fundamentals and its stock price.
AMC stock jumped by almost 900% in January, as Reddit-inspired retail traders successfully squeezed the short positions taken by a number of major hedge funds. Despite coronavirus restrictions limiting its ability to actually open theatres, the company's stock price surged from $2 to almost $20.
This feat was topped in June when the company stock rose as high as $72.62, representing a 3,000% increase on the start of the year.
CEO Adam Aron, who openly embraced the retail trading frenzy, has capitalised on the stock price surge by raising capital.
Describing the quarter as “transformational”, Aron stated: “We raised yet another $1.25bn of new equity capital (before commissions and fees) in the quarter, boosting our quarter [by] ending liquidity to more than $2bn (including cash and undrawn revolving lines of credit), which is about double the previous highest ever such mark in AMC’s 101-year history.”
Cinema chain to accept bitcoin payments
In a late-Monday earnings call, the 66-year old executive revealed that cinema chain plans to introduce technology to let customers in the US pay for their snacks and tickets in bitcoin by the end of the year.
Aron said: “I've had to learn more in the past six months about blockchain and cryptocurrency than I learned about it in the entire decade before that.”
He added: “We’re exploring how else AMC can participate in this new burgeoning cryptocurrency universe, and we're quite intrigued by potentially lucrative business.”
Despite Aron warning that the company was “not yet out of the woods”, AMC traded up by 8.4% at $36.65 before the bell, 46% below its June all-time high.