Headquartered in Leawood, Kansas, AMC Entertainment Holdings, Inc., owns, operates, or has interests in motion picture theaters. Operating approximately 1000 theatres and 10,700 screens both in the U.S. and Internationally, it is the world’s largest movie theater chain. As of late, however, shares in the company have been best known for their association with the “meme stock” phenomenon. 

In January 2021, traders from Reddit’s r/WallStreetBets community coordinated a short squeeze, shortly after the company completed a $917 million capital raise. This initial winter surge sent shares from around $3.50 per share, to as much as $20.36 per share. During this period China-based Wanda Group, ended its majority ownership of the company.

After pulling back in price, as the initial “meme wave” ended in February, starting in June, the stock became the target of another coordinated short-squeeze from traders. This squeeze resulted in an even more substantial run-up in the price of AMC stock. 

Hitting prices as high as $72.62 per share, the meme stock has again fallen to a lower price. But at around $40 per share, it remains up by nearly 1800% (as of Nov 12, 2021).

Recent Developments

As seen in its most recent quarterly results, AMC Entertainment is still struggling to recover from the impact of Covid-19 on movie theater attendance. Even so, it’s held onto its meme stock gains. 

Some have pointed out that much of this may have to do with the company’s efforts to engage with its current shareholder base, made up of retail traders (who sometimes refer to themselves as “Apes.”

Thanks to his communication with the Reddit trader community, CEO Adam Aron has started to turn some of their ideas into corporate policy1. For example, the movie theater chain now allows customers to make purchases using popular cryptocurrencies2, such as Bitcoin, Ethereum, and Dogecoin.

However, while Aron has made various moves to help sustain the stock’s rich value (which analysts will point out is divorced from its underlying value), he has been not-so-quietly cashing out. Recent headlines discuss how Aron has unloaded or plans to unload what’s seen as a large portion of his personal AMC stock holdings3.

Financial Highlights

Income Statement

In the trailing twelve months (TTM), AMC Entertainment has generated $1.33 billion in revenue4. Due to the Covid-19 pandemic, its recent results are down substantially from the $5.02 billion in sales it generated in calendar year 2019.

The pandemic has also severely impacted its profitability, both in terms of EBITDA (earnings before interest, interest, taxes, and amortization) and net income. Over the past twelve months, AMC has posted negative EBITDA of $883.1 million, versus $710.3 million in positive EBITDA during 2019.

In 2019, the company experienced a net loss of $149.1 million (negative earnings per share, or EPS, of $1.44). But this loss pales in comparison to heavy losses experienced due to the outbreak. Posting a loss of $4.58 billion (negative EPS of $39.15 per share) in 2020, over the past four quarters the company has posted a net loss of $2.08 billion (negative EPS of $5.38).

Based on its results in the most recent quarter (more below), as its operations have fully reopened, AMC is expected to generate substantially stronger results in the quarters ahead.

Balance Sheet

Thanks to several equity offerings it has executed since becoming a “meme stock,” AMC Entertainment currently has around $1.6 billion in cash on its balance sheet, and a total of $1.8 billion in liquidity5. By comparison, on Dec 31, 2020, AMC had just $308.3 million in cash.

Total assets come in at $11.06 billion, however $4.3 billion of this comes from operating leases, and $2.45 billion is attributable from goodwill resulting from its prior acquisitions of other movie theater chains.

Counter to its $11.06 billion in assets is around $12.7 billion in liabilities. This is mainly made up of its $5.43 billion in outstanding long term debt, plus $4.79 billion in lease liabilities.

While AMC Entertainment’s balance sheet has improved substantially year-to-date, these improvements have come at the cost of shareholder dilution. The company’s outstanding share count has nearly tripled, from 172.56 million outstanding on Dec 31, 2020, to 513.33 million outstanding as of Sep 30, 2021.

Recent Results

With its operations “substantially open” for the first time since the start of the Covid-19 outbreak, AMC Entertainment reported results for the third quarter (ending Sep 30, 2021) that were up substantially year-over-year.6

Revenue of $763.2 million was six times higher than what the movie theater chain reported in Q3 2020. Top line results also came in above analyst expectations. Sell-side analysts were expecting revenue of just $708.3 million.7

Besides beating on revenue, AMC also delivered lower-than-expected losses. Losses of 44 cents per share came in under analyst estimates calling for 53 cents in losses. Adjusted EBITDA losses also saw big improvement. Adjusted EBITDA losses for the quarter came in at essentially breakeven (-$5.4 million), which may show the company is moving beyond the heavy cash burn it has experienced since early 2020. For example, in the prior year’s quarter, the company saw adjusted EBITDA losses of $334.5 million.

Yet while also showing signs that its hard-hit movie theater operations were starting to bounce back, CEO Adam Aron did not try to spin the results as a sign the company’s made a full recovery. In the press release that accompanied earnings, Aron matter-of-factly stated that the outbreak is still negatively affecting its operations. As he put it “we need to sell more tickets in the future quarters than we did in the most recent quarter.” Aron also pointed out that the company’s Adjusted EBITDA remains far below where it was before the pandemic.

  1. ^ https://www.cnbc.com/2021/10/29/how-the-amc-apes-cracked-wall-street.html
  2. ^ https://markets.businessinsider.com/news/currencies/amc-bitcoin-ether-litecoin-online-payment-movie-dogecoin-shiba-inu-2021-11
  3. ^ https://www.bizjournals.com/kansascity/news/2021/11/12/amc-entertainment-ceo-sells-stock-worth-worth-25m.html
  4. ^ https://seekingalpha.com/symbol/AMC/income-statement#figure_type=ttm
  5. ^ https://s25.q4cdn.com/472643608/files/doc_financials/2021/q3/FINAL-3Q-Earnings-Press-Release-20211108-1430-v.F.pdf
  6. ^ https://www.marketwatch.com/story/amc-beats-earnings-expectations-but-warns-that-virus-continues-to-be-with-us-11636408296
  7. ^ https://www.cnbc.com/2021/11/08/amc-entertainment-amc-q3-2021-earnings.html
Created by Thomas Niel on 2021/11/15 08:23
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