AMC Entertainment (AMC) - Get Report shares surged higher Thursday after the world's biggest cinema chain posted a narrower-than-expected fourth quarter loss and said new movie releases and accelerating COVID vaccinations will boost revenues in the months ahead.
AMC's loss for the three months ending in December was pegged at $328 million -- and $4.6 billion for the year -- as fourth quarter revenues collapsed nearly 90% to just $162.5 million as theatres remained closed during the tail end of the pandemic and movie-goers stayed at home to binge on streaming services and online releases.
Theatre openings in New York and California, however, as well as the nation's accelerating vaccination rate, which is set to top 100 million later this week, are set to boost AMC attendance and bolster its top and bottom lines.
The group is also planning to capitalize on its recent 'Reddit Rally', which has lifted its stock nearly five-fold since late January, to issue another 500 million shares in order to pay down debt or slow its cash burn rate.
"It's probably notable to point out that of the more than $2.2 billion of cash will be raised between April of 2020 and now. About 99% of that cash, ironically, came in before the Reddit Rally," CEO Adam Aron told investors on a conference call late Wednesday. "But as I look at all those retail investors, I realize and truly take to heart, one thing among others, how 101-year-old AMC is a crucial part of the American zeitgeist."
"Many Americans have a strong affection for AMC. They've been going to our movie theaters for years and years or for decades and decades, and we intend to get many of these people to very soon be ticket-buyers at our AMC theaters once again."
AMC shares were marked 5% higher in early trading Thursday to change hands at $10.40 each.
We believe virus mitigation efforts has inflected in the U.S., we anticipate an accelerated trend toward a desire for normality, escapism and out of home entertainment," said Mike Hickey, analyst at The Benchmark. "The recent box office strength from Tom and Jerry, a movie that succeeded despite poor reviews and reduced screen capacity, was a wakeup call that a box office growth reset has emerged."
"We remain encouraged that widespread vaccinations, regulatory unlocks and blockbuster films will drive box office growth, like what we have witnessed in China, Japan and Australia," he added.