Shares of the multiplex operator have declined in the four trading days since it posted better-than-expected financial results. Lets take a closer look.

Key Points

  • The multiplex operator beat expectations, but its still far from pre-pandemic levels.
  • One of next months biggest theatrical releases is being delayed by three weeks.
  • This weekends top draw is faring worse than most recent top debutantes despite being available only in theaters for the first 45 days.

This past week couldve been a defining moment for AMC Entertainment Holdings (NYSE:AMC). The countrys leading multiplex operator was slated to report fresh financial results. Retail investors were mounting a show of force. A rare theatrical release thats only available at theatres was going to light up the box office. 

Things didnt exactly play out that way. The stock chart will argue that last week wasnt a dud; AMC stock rose 2.4% for the week, more than tripling to the markets mere 0.7% ascent. However, with the stock still trading for less than half of its early June peak, it was a blown opportunity for the exhibitor to show off. Lets go over the week that was -- as well as the week that couldve been.

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Image source: Getty Images.

Earning the sequel 

AMCs second-quarter report hit a lot of the right notes. Revenue exceeded expectations, even if its still clocking in 70% below where it was just two years ago. AMC posted its eighth straight quarterly loss, but the deficit was less than analysts were targeting. Liquidity is at an all-time high, even if the chain is burning through cash despite having all of its U.S. theaters now open.  

The 101-year-old chain also had forward-thinking announcements in its earnings call. AMC expects to start accepting cryptocurrency for payment by the end of the year. Its also exploring new content deals, including a potential esports partnership with a fellow meme stock. 

There was more good news and bad news in the report, but sometimes the market has other plans. AMC shares may have moved higher last week, but more than all of those gains happened on Monday in anticipation of the Monday afternoon report. The stock has actually moved lower in the four trading days since its earnings release.

As decent as AMCs report may have come across, it was also a failure of galvanization. AMC has more than 4 million retail investors, and social platforms blew up with a plan to come together. They would bid up a question -- oddly enough about AMCs dividend policy -- to show how the apes could vote in unison. The question was voted up by less than 2% of the retailer investors representing just 1% of the shares outstanding. 

The rest of the week wasnt very encouraging. Just when it seemed as if Hollywood was coming back to the multiplex, the highly anticipated Venom sequel had its theatrical release bumped from late September to mid-October. The three-week delay is in response to a surge in COVID-19 cases, and it could be problematic to the industrys turnaround prospects if more upcoming flicks follow suit. 

Things didnt get any better on Friday. Free Guy -- a rare theatrical release that is only playing at theatres -- sold a little more than $10 million in domestic tickets on Friday. Other summertime releases including The Suicide Squad, Black Widow, Space Jam, and Jungle Cruise that were also available to stream at home fared better on their opening Friday than Free Guy. The argument that movies are doing so poorly at the box office relative to pre-pandemic levels because folks can catch them through digital delivery on demand is starting to ring hollow. In short, this turnaround is going to take some time. AMC may have started out last week on a strong note, but it closed it out with the return of old questions. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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