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AMC Stock: Now We Know What Tickles Investors

AMC reported Q3 earnings on November 8. After-hours share price action provided a clue of what pleases investors – and what doesn’t.

On November 8, AMC reported earnings. Despite the all-around beat, AMC stock  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report dipped right after the release of the earnings report and finished the next trading day down an uncomfortable 11%.

Figure 1: A pedestrian walks by the newly reopened AMC 34th Street theater on March 5, 2021, in New York.

Figure 1: A pedestrian walks by the newly reopened AMC 34th Street theater on March 5, 2021, in New York.

But maybe more important than shares having dropped below $40 once again, it was curious to observe how share price moved in after-hours trading – and what caused the largest spikes and drops during the earnings call. Two key topics stood out, and we present them below.

Quick look at key numbers

Before moving on, let’s talk about Q3 results. The movie theater operator delivered an all-around beat on revenues of $763 million and net loss per share of 44 cents. Despite some words of caution on the pandemic recovery, management’s outlook seemed optimistic:

“As we announced just a week ago, our October theatre admissions revenues were the highest of any month since before the global pandemic forced the closure of our cinemas more than a year and a half ago. That is just one more good sign among many we have seen in 2021.”

Other key metrics also looked particularly good. First, global attendance nearly doubled from 22 million last quarter to 40 million this time. Also, food and beverage revenues jumped more than $100 million sequentially. Curiously, AMC sold nearly twice as much at the concession stand in Q3 than it did in movie tickets between April and December of last year.

What investors love: crypto and NFT

Around 5:30 p.m. EST, about half an hour into AMC’s earnings call, shares traded down -5.5% after hours. But then, CEO Adam Aron quickly touched upon two related topics of conversation that caused AMC stock to spike nearly three percentage points in a matter of seconds:

“AMC has been speaking publicly […] about cryptocurrencies and NFTs. [We] have been exploring […] how we can accept crypto currency and if it is feasible for AMC to consider even launching our own crypto currency. Similarly, […] we are now in conversations with multiple major Hollywood studios about the concept of joint venturing commemorative NFTs related to major film titles that show in our theaters.”

This is clearly a topic that excites investors and traders. This seems to be particularly true in Q4, after (1) Bitcoin managed to reach all-time highs once again and (2) alternative coins, such as Shiba Inu, have caught the attention of so many.

What investors hate: selling AMC

However, not all was reason for speculators to bid up the price of AMC stock in after-hours action. Only about 10 minutes after discussing crypto and NFT, the CEO revisited the topic of selling some of his AMC shares as he approaches retirement age. His quote:

“I [expect] to sell some AMC shares before year-end. […] So, you should expect to see some stock transactions shortly on my behalf. I can only imagine that naysayers and others who wish AMC harm will try to spread fear, uncertainty, and doubt in this regard. But here is what they probably won't tell you: […] I will still have well more than 2 million fully owned or granted AMC shares in my name.”

In a matter of seconds again, AMC stock lost steam and shed about two percentage points of returns – about two-thirds of the gains produced after the crypto and NFT debate. Because AMC thrives on momentum and the resilience of “diamond hands”, the idea of the company’s own CEO selling stock did not cause a good impression – even though Mr. Aron had already talked about the subject during the Q2 earnings call, about three months ago.

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(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)