Film Exhibitors Are Healing, but AMC Theatres Has Longer Path to Recovery

Theimproving box office may have media moguls doubling down on exclusive theatrical windows, but Wall Street hasnt abandoned caution just yet, particularly when it comes to AMC Theatres.

Months after its return to normalcy following the GameStop-driven meme stock craze, AMC Theatres stock is still under where it was before the pandemic began and has been trending downward in small increments since last fall. Since first-quarter earnings were disclosed May 5, the stock has fallen another 16% as of Tuesday.

That hasnt been the case for smaller movie chains Cinemark and Marcus Theaters. While their stocks are still well below where they were in January 2020, theyve been rising throughout 2023 off the back of Avatar: The Way of Waters global success and especially in April, when The Super Mario Bros. Movie was a highlight as it became the most successful animated movie of the decade so far.

So, whats the animosity regarding AMCs stock? Simply put, it may be too big to chart a quicker path to stability than its rivals.

B. Riley Securities has pinned AMCs total enterprise value at $12.3 billion, more than double anyone else in domestic film exhibition. While rivals like Cinemark and Marcus earn substantially less, the analysts outlook for adjusted EBITDA over the next two years is actually higher for Cinemark than it is for AMC, despite their differences in size.

AMC is balancing a significant debt load as it scoops up struggling theaters, raising the possibility the company will need to seek additional capital. AMCleans on premium concessions and large-screen formats at its many locations to maintain state-of-the-art experiences that motivate consumers to spend more on tickets. While this has helped Imax stock stabilize to pre-pandemic levels as a major proprietor of such formats, the cost of maintaining such tech at so many theaters adds up.

AMC faced substantially bigger losses in 2022 than its competitors, despite it being the first fully uninterrupted year from COVID, and net loss in the first quarter of 2023 totaled more than $230 million. By years end, analysts expect AMC to still log a net loss for the year, as opposed to Cinemark, Imax and Marcus.

While AMC may take longer to reach a better financial outlook, it doesnt compare to the state of bankrupt Regal Cinemas operator Cineworld. It only recently reached a settlement with a minority of its lenders that opposed some aspects of its exit financing and received U.S. approval earlier in May to raise $2.26 billion as part of its path out of Chapter 11 bankruptcy, which it aims to achieve before July.

Then theres the largest in-theater advertiser, National CineMedia, which arrived at the creditor polling stage this month after announcing its planned bankruptcy filing in March.

As much as AMC may miss its bonkers climb up the stock market in 2021, it could definitely be worse.