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Cinemark, AMC Stock: U.S. Box Office Doubles, Still Down 60% from 2019

Recovery is relative when it comes to the future for AMC, Cinemark, and other theater chains.

Recovery can be relative.

If, for example, you have a long-term illness and feel 100% better than you did a year ago, but 60% worse than before you got sick, well, your recovery is relative.

That's what has happened to the U.S box office. The theatrical business has doubled year-over-year, but it's still 60% below where it was in 2019. Call that good news which needs to be viewed through the proper perspective.

Some recovery beats no recovery but questions as to whether we'll ever see a full recovery remains. That's, perhaps, sobering news for AMC (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report and Cinemark (CNK) - Get Cinemark Holdings, Inc. Report shareholders.

2021 Doubles 2020 at the Domestic Box Office

The pandemic has not ended. And while vaccines allowed once-shuttered movie theaters to open, the ongoing presence of Covid-19 and the omicron and delta variants made some people stay home. 

Despite the pandemic, though, there were some positive signs at the box office highlighted by Walt Disney's (DIS) - Get Walt Disney Company Report "Spider-Man: No Way Home," at the end of the year, which did pre-pandemic-like business.

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Hits like that, however, were few and far between. Some films were hurt by day-and-date releases on streaming platforms while others went to streaming only. That made it another challenging year for AMC and Cinemark, albeit one that had some positive signs.

"Comscore has estimated the 2021 domestic box office at $4.55B, which is +100% from last year’s $2.28 billion and off 60% from 2019’s $11.4 billion. While it would be impossible to think we’d come raging back to 2019 norms, it is arguable that the domestic box office recovery isn’t as robust as many expected," Deadline reported.

Movie Theaters Are in the Blockbuster Business Now

"Spider-Man" showed that hits are still possible even with the pandemic still raging. A lot of other releases, with "West Side Story" being the most recent example, showed that the type of film which will get people to go to theaters has become much more narrow.

“The pace of the recovering is occurring at a slower than anticipated pace,” Eric Handler, MKM Partners managing director, senior research analyst told Deadline. “But the recovery will continue. Part of the problem is there’s just fewer films. The whole middle market is gone, but tentpoles will continue to improve.”

AMC and Cinemark now have to fight with streaming services owned by the very companies that make the movies. This means that the Disney's of the world no longer need theaters in the way they once did. What makes for a successful movie no longer necessarily begins and ends with the box office.

Daniel Kline has a long-term position in Walt Disney.