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AMC Stock: Here’s Great News For The Movie Industry

AMC stock could react positively to news delivered on Wednesday by one of the company’s key peers. Here’s what investors and traders should know.

Wednesday, February 23, was light on company-specific news that could have impacted AMC stock  (AMC) - Get Free Report. However, movie theater peer IMAX Corporation  (IMAX) - Get Free Report delivered Q4 results that looked encouraging to the industry at large.

Today, Wall Street Memes looks at this earnings report and assesses if this could be a catalyst for AMC stock to head higher.

Figure 1: AMC Stock: Here’s Great News For The Movie Industry.

Figure 1: AMC Stock: Here’s Great News For The Movie Industry.

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IMAX: pandemic is behind

On the headline numbers, IMAX’s revenues that nearly doubled YOY topped Wall Street’s expectations by $20 million. The bottom line looked equally good: non-GAAP EPS of $0.31 was nearly double the consensus estimate of $0.17.

But in what pertains to AMC, the narrative about the recovery from the pandemic days is what I think was most important. Here, it was impressive to see IMAX performing well not relative to last year, but even to 2019. Below is a quote from the company’s earnings release:

“Quarterly results met or exceeded pre-pandemic levels across key metrics. IMAX delivered operating income, global box office, and gross margin in the fourth quarter of 2021 that exceeded the fourth quarter of 2019; as well as quarterly adjusted EPS and adjusted EBITDA substantially in-line with the fourth quarter of 2019.”

In an interview with CNBC after the closing bell, IMAX CEO Richard Gelfond sounded confident about the industry in 2022. First, he highlighted strong demand for theater experiences following what he sees as two years of underwhelming content releases on streaming platforms.

Then, he pointed at a strong lineup of movies coming up in the next two months alone: Batman, Jurassic World, Dr. Strange, Top Gun and Thor. The sequel to Avatar later in the year should also be a key event, in the CEO’s opinion.

IMAX stock traded as high as 9% in the after-hours session, but the price slid a bit from the top during the company’s earnings call.

AMC: likely a beneficiary too

To be fair, IMAX’s and AMC’s service offerings are a bit different, despite both operating in the same industry. Still, the same factors that benefit one are likely to benefit the other — i.e., strong demand at the box office, consumers’ willingness to allocate entertainment dollars to movie theaters, and a solid lineup of new movie titles ahead.

AMC is in the middle of its own recovery. During Q3 earnings season, the company reported global attendance of 40 million that was substantially higher than only 7 million in Q1. In October, attendance had spiked to 70% of 2019 levels vs. 46% in Q3.

The company’s Q4 earnings day will not be until next week, on March 1. But I expect not only the financial performance to be strong (in fact, much of it has already been preannounced), I also think that CEO Adam Aron will sound at least as optimistic as usual about the recovery.

Could AMC stock spike?

In after-hours action, IMAX’s numbers did not quite translate into strength for AMC. Despite IMAX being up, AMC shares were slightly down a couple of hours following the closing bell.

Therefore, it is not a given that encouraging news about the movie industry will cause AMC stock to spike on Thursday. Price action will likely depend on a few other factors, including (1) the tone of the broad market, which is currently in correction mode, and (2) the enthusiasm (or lack thereof) of AMC investors, traders and “apes”.

(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)