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AMC First-Quarter Earnings: What to Expect

AMC's first-quarter earnings report is approaching. Here's what to expect.

AMC Entertainment   (AMC) - Get Free Report has set a date for its first-quarter earnings report. On May 9, the movie theater company will report its results after the market closes.

In its previous earnings release, AMC reported its best results in two years. But AMC management anticipates Q1 to have been a difficult quarter, especially compared to the ones to come. Is AMC ready to switch from defensive to offensive mode?

Figure 1: AMC First-Quarter Earnings: What to Expect

Figure 1: AMC First-Quarter Earnings: What to Expect

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What to Expect in Q1 Earnings

The consensus among experts is for AMC to report a loss per share of 68 cents. That would imply growth of more than 50% compared to the same quarter last year, when the company was still struggling to climb out of the hole that the pandemic had put it in.

Already, the revenue consensus estimate for AMC in Q1 is $736.2 million. This would represent an increase of almost 397% compared to the same quarter last year. However, it would be below the last two quarters, when AMC reported revenues of $763 million and $1.17 billion, respectively.

However, probably the main data point that investors would like to know is how far AMC has to go to get back to pre-pandemic levels. Last quarter, nearly 60 million moviegoers represented 64% of pre-pandemic levels. As expected in a post-pandemic scenario, this ratio has progressively improved in recent quarters both domestically and internationally.

Also of interest will be revenues in the company's food and beverage segment. Last quarter, revenues here reached 87% of pre-pandemic levels. According to CEO Adam Aron, there are still a few more quarters to go before AMC can finally return to 2019 levels.

It is expected that the numbers will still not be great in Q1. Earnings and revenues will likely come in below the last two quarters. The reason behind the slowdown is due to the timing of big movie releases in 2022. According to AMC's management, the first quarter of 2022 is expected to be AMC's low point of the year, and significant sequencing improvements are expected as 2022 progresses.

AMC on Attack Mode?

Last quarter, AMC reported its best quarter in two years, indicating a full recovery from the pandemic. According to CEO Adam Aron, the last quarter allowed AMC to turn the corner from defensive to offensive posture, as AMC achieved EBITDA (earnings before interest, taxes, depreciation, and amortization) and operating cash flow positives, with about $1.8 billion in cash liquidity.

It is worth remembering that part of this liquidity came thanks to the help of AMC's shareholders, who allowed the company to raise more than half a billion dollars by issuing new stock offerings.

In this way, AMC can now achieve new feats. Among them, according to the plan drawn up by the company's management, are:

  • Modernizing its core business — the movie theaters — by upgrading its IMAX and Dolby Cinema premium screens
  • Paying down company debt by refinancing $5 billion of debt to reduce future interest
  • Investing and acquiring new businesses for long-term growth, such as the retail marketing of its branded popcorn and the acquisition of gold and silver miner Hycroft Mining  (HYMC) - Get Free Report.

This last investment, AMC's Hycroft Mining stake, has probably been the main recent catalyst to have moved AMC shares considerably. AMC stock soared almost 100% in the days following the acquisition, generating a sudden surge in trading volume for both AMC and Hycroft Mining shares.

Retail Investors Just Need a Bullish Spark

Based on how AMC has been trading since the beginning of last year, it is possible that no single fundamental issue could influence either positively or negatively the path of AMC shares.

This leads one to believe that, regardless of whether AMC reported an earnings or revenue beat or miss, it should matter little to AMC shareholders — as seen in the latest earnings reports — because the company's float is owned by retail investors, many of whom follow a buy-and-hold-no-matter-what strategy.

However, as the latest AMC rallies attested, news regarding innovations in the company's business can be strong catalysts, since AMC stock is highly sensitive to FOMO (fear of missing out) sentiment by retail investors.

I believe that news, especially about growth plans, future investments, and new acquisitions has the potential to make AMC's earnings report move its stock.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)