Resilience in the Face of Change
Despite the challenges it has faced, the movie theater business has shown remarkable resilience. As far back as the early 2010s, there was a noticeable shift in consumer behavior with the advent of streaming services like Netflix. The proliferation of these services and the quality of their content posed significant challenges to movie theaters. Then, in 2020, the COVID-19 pandemic further disrupted the industry. Theaters were forced to close for months, altering audience behavior and expectations of film releases. However, the industry has shown a solid determination to adapt and survive.
Now, as theaters such as AMC strive to get back on their feet in a big way, there are trepidations. While there have certainly been big wins, such as the joint success of Oppenheimer and Barbie last summer, there have also been big misses in the past few summer months. With Disney’s Inside Out 2 quickly becoming the most prominent performer of the year, theaters such as AMC might still have a fighting chance.
Financial Performance and Market Challenges
AMC Entertainment (AMC) closed the most recent trading day at $4.81, moving -1.03%. The stock trailed the S&P 500, registering a daily loss of 0.25%. Similarly, the Dow saw an upswing of 0.77%, while the tech-heavy Nasdaq depreciated by 0.79%.
Heading into today, shares of the movie theater operator had lost 3.95% over the past month, lagging distinctly behind the Consumer Discretionary sector’s increase of 0.82% and the S&P 500’s addition of 3.59%.
Undoubtedly, the investment community will pay close attention to AMC Entertainment’s earnings performance in its upcoming release. As the summer movie season rolls on, if other forthcoming releases such as Despicable Me 4, A Quiet Place: Day One, or Deadpool & Wolverine can tap into the same nostalgia-driven meteoric success that Inside Out 2 is currently enjoying, things could turn around substantially in AMC’s favor. In the meantime, current consensus estimates forecast the revenue to be $1.06 billion, which would be a 21.53% decline compared to the corresponding quarter of last year.
It is worth noting that last year was an especially great year at the box office, which would have contributed to much larger revenue for the AMC Entertainment brand. While there had been precursors of post-COVID box office success in significant ways, like 2021’s Spider-Man: No Way Home or 2022’s Top Gun: Maverick, those films stood out as singular achievements in a field of lesser performers.
Meanwhile, 2023 saw the widespread success of multiple films, with audiences showing back up the theater in a massive way for the first time since COVID-19. As mentioned, Oppenheimer and Barbie both made huge numbers, but so did many other films, including (relatively speaking) everything from The Super Mario Brothers Movie to Poor Things.
As the year progresses, AMC Entertainment is poised for a significant rebound. The first part of the year may have been relatively light on breakout success stories, but there are numerous reasons to be optimistic about the future of movie-going and the potential for AMC’s stock to rise. The industry is adapting, and AMC is well-positioned to benefit from these changes.
