By looking at AMC stock's (AMC) - Get AMC Entertainment Holdings Inc. Class A Report behavior on Wednesday, March 2, one would think that the movie theater operator delivered disappointing results the day before — shares had dipped nearly 3% by noon. But this was not really the case.
On March 1, AMC posted Q4 revenues of $1.17 billion and global attendance of nearly 60 million that showed how much the company has recovered from the depths of the pandemic. But why hasn't the stock reacted positively?
AMC: in full recovery mode
To be clear, AMC is not yet operating at pre-pandemic levels. But the numbers prove that this is probably only a matter of time.
Revenues had been preannounced, so the massive 620% YOY top-line increase should not have been a surprise. Other operating metrics told a similarly upbeat story about AMC's execution at the end of 2021.
The nearly 60 million moviegoers represented 64% of pre-pandemic levels. This ratio has been improving progressively over the past many quarters. In this regard, the company has been performing equally well domestically and internationally.
The rebound is even more evident in food and beverages. Revenues here reached 87% of pre-pandemic levels, with average revenue per patron of $6.38 looking substantially better than $4.74 in Q4 of 2019.
Clearly, AMC's customers have been reaching deeper into their pockets, hitting the concession stands and going for the full experience.
Balance sheet looking solid
In my view, the better news of the quarter were positive EBITDA and operating cash flow. Because AMC was hit particularly hard by the pandemic and the stay-at-home trends, the company's balance sheet had once been a concern.
Now, with $1.8 billion in liquidity and with cash flowing in, I do not think that AMC needs to worry too much about playing defense anymore.
In fact, during the earnings call, the discussions seemed to revolve mostly around growth initiatives. AMC is expanding its business model to include merchandise sale, packaged popcorn, even NFT and crypto.
Regarding non-fungible tokens, AMC has already partnered with movie studios to issue Spider-Man digital assets. But on the crypto front, investors may have been disappointed to learn that an AMC Coin is unlikely to see the light of day soon.
Why is AMC stock not rising?
Based on fundamentals alone, I think AMC stock should have traded higher following the earnings release. But those who follow this name know that share price does not always correlate with the performance of the underlying business.
I know that some (or even most) "apes" have been very skeptical of market dynamics favoring the shorts. But the stock's modest dip after earnings could be just noise — in other words, not indicative of longer-term trends in share price.
What is most likely to make a difference for AMC stock, as usual, is momentum and sentiment. In that regard, anything can happen next, including a long-awaited rally.