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Even Spider-Man Can't Save AMC and Cinemark Stock

It's hard to see how AMC stock recovers when people have chosen to only go to the movies for big blockbusters.

"Spider-Man: No Way Home" made it seem like the pandemic had passed and that people wanted to go back to movie theaters, In reality, people very clearly wanted to go see the latest Spider-Man film much like (albeit to lesser extents) they were willing to go to theaters to see the latest James Bond and Fast & the Furious sequels.

When movie theater chains including AMC Entertainment (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report and Cinemark Holdings (CNK) - Get Cinemark Holdings, Inc. Report don't have a blockbuster release in its first few weekends -- and that's a very short list of films -- they don't attract an audience. That's something that the very lackluster box office of this weekend has shown and it's not about to get better.

"Some studio distribution bosses used to say that moviegoing is a 52-week business. Well, that’s not the philosophy this weekend, and it’s even grimmer next weekend," wrote Deadline's Anthony D'Alessandro.

January has never been a strong month at the box office, but it used to be possible to have hits in the post-Martin Luther King Day weekends, D'Alessandro noted.

"Back in the good ole days, and we’re talking five years ago, post-MLK was the time when Universal turned M. Night Shyamalan’s Blumhouse horror movie "Split" into an event with a $40M start, and Paramount settled for second on their Vin Diesel sequel, "xXx: Return of Xander Cage," for $20.1M," he wrote.

How Bad Will This Weekend's Box Office Be?

Deadline forecasts that Jan. 21 through Jan. 23 will deliver a domestic box office of around $43-45 million. That's down from a pre-pandemic $105 million in 2020, $73 million in 2019, $102 million in 2018, and $111 million in 2017, according to data from Box Office Mojo.

In fact, 2019's total was the lowest box office haul for this weekend since 2001. In general, the next-to-last weekend of January has driven roughly $80-110 million in box office and this year will deliver around half of the mid-range of that number.

AMC's CEO Remains Optimistic

AMC CEO Adam Aron has been relentlessly positive when it comes to the state of the movie business. That is, of course, his job as it would be difficult for him to keep the company afloat if he acknowledged that while the numbers will bounce back from the pandemic lows, they may never fully recover. That's partly because of trends happening before the pandemic and partly due to changing patterns for film releases.

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An increasing number of films come out either direct-to-streaming or in a hybrid model that limits how much money a film makes in theaters. Aron, however, chooses to focus on what he can control and commented during the company's most recent earnings call in November. 

"At the beginning of 2021, we shared with you our view that both the film exhibition industry and AMC would see sequential improvements in the industrywide box office during the course of 2021," he said. "And indeed, we are seeing exactly that. The industry's box office has been meaningfully increasing each and every quarter, thanks to improved vaccination levels and an increasingly appealing film slate."

That has happened, but the reality is that only a certain type of movie -- call them megablockbusters -- still bring people to theaters. The current box office, as well as the moves being made by the companies that produce movies, and the fact that most people have really big TVs in their homes make it likely that the movie business won't return to pre-pandemic levels.

Walt Disney (DIS) - Get Walt Disney Company Report, for example, will release some of its films direct to its Disney+ streaming platform at no extra cost while others will be released on a hybrid basis where subscribers pay extra to see the movie. That means that movies that once came out in theaters either won't or will on a limited basis. In addition, every major studio has shortened the theatrical window so even movies that do have a traditional release will head to streaming much sooner than they used to.

AMC and Cinemark will also continue to be hurt by Netflix (NFLX) - Get Netflix, Inc. Report and other streaming services producing movies that will never play in theaters.