AMC Entertainment (AMC) Stock: Why It Surged Over 18% Today

By Amit Chowdhry ● Aug 5, 2022
  • The stock price of AMC Entertainment (AMC) surged over 18% during intraday trading today. This is why.

The stock price of AMC Entertainment (AMC) surged over 18% during intraday trading today. Investors are responding positively to AMC Entertainment to a couple of catalysts, including the quarterly earnings and a special dividend of one AMC Preferred Equity unit for each share of AMC Class A common stock.

Some analysts are saying that the dividend will enable the company to have an opportunity to repay its large amount of debt and make investments.

Quarterly Earnings

AMC announced its second-quarter results after the market closed yesterday. For the second quarter, AMC reported a loss per share of $0.20 – which was slightly lower than analyst estimates of a loss per share of $0.19. And the revenue for the quarter was $1.17 billion – which was slightly higher than the consensus of $1.16 billion. Plus AMC reported a consolidated attendance of 59.13 million.

Special Dividend

AMC Entertainment also announced that it has declared a special dividend of one AMC Preferred Equity unit for each share of AMC Class A common stock, par value $0.01 per share, outstanding at the close of business on August 15, 2022. This special dividend is expected to be paid at the close of business on August 19, 2022.

The company has applied to list its AMC Preferred Equity Units on the NYSE under the symbol “APE” starting August 22, 2022 and each AMC Preferred Equity Unit is designed to have the same economic and voting rights as one share of Common Stock.

The AMC Preferred Equity Units can convert into Common Stock, but only if the Company proposes and investors vote to approve an increase in the number of authorized shares of Common Stock, in an amount at least sufficient to permit the conversion of the AMC Preferred Equity Units into Common Stock (through a Common Stock Amendment).

Key Quotes About Quarterly Earnings

“AMC just completed a spectacularly encouraging second quarter that boosts our mood and brightens our prospects as we look ahead. Total Revenue in the second quarter of 2022 was more than two and a half times the revenue of the second quarter a year ago, and Adjusted EBITDA of a positive $106.7 million compares ever so favorably to a loss a year back in Adjusted EBITDA of a $150.8 million. That is a $257.5 million improvement in only twelve months. In addition, we achieved positive Operating Cash (Burn) Generated of $52.0 million, a $178.8 million improvement from 2021’s second quarter. Our Q2 2022 results, in our minds, prove once again what we have long said, that as Hollywood releases movies with broad consumer appeal, people will flock to see them at movie theatres in huge and eye-popping numbers. In the second quarter of 2022, AMC had attendance of 59 million people at our theatres globally, up 168% from the 22 million attendees in the same quarter a year ago. So, we would like to extend a special thank you to Doctor Stephen Strange, Tom ‘Maverick’ Cruise, Elvis Presley, and all those hungry people-eating Jurassic dinosaurs who graced our big screens in the quarter.”

“It is similarly exciting that AMC is driving so much additional revenue per patron, including in our highmargin food and beverage business. At our AMC theatres in the United States, Food & Beverage spending per patron was $7.52 versus $5.58 in the comparable pre-pandemic quarter of 2019, up 34.8%. Internationally, F&B revenue per patron in these periods was up 21.5%. Globally, our Other Revenues per patron were $2.01 in Q2 of 2022 versus $1.22 in Q2 of 2019, also up a healthy 64.8%.”

“In our unique circumstance, while our loss per share benefits from improved operating results, it is also impacted by our quarterly marking to market of the volatile share price of Hycroft Mining Company. Because of stock price swings, in the second quarter of 2022 we wrote down much of the large gains that were booked in the first quarter. While our reported losses will continue to be impacted by market price volatility, we continue to believe strongly in the potential value of our $28 million Hycroft Mining investment. In fact, Hycroft just announced it would commence its largest drilling exploration program in nearly a decade, and we have every confidence that over time our investment in Hycroft will pan out to be golden.”

“Looking ahead, we could not be more bullish about the probability of significantly improving operating results for AMC, beginning with Q4 of 2022 and continuing in 2023. As but two examples of let the good times roll, attendance in the just-completed month of July 2022 saw the highest number of guests visit AMC’s U.S. theatres since December of 2019, and our preliminary July food and beverage revenue numbers appear to be the biggest single-month figure at our U.S. theatres in our company’s entire 102-year history. For full transparency, there is a dearth of new big movie titles being released in August and September, so things will slow for several weeks, but then comes Q4. Talk about star power, these movies and more will all grace our screens at AMC in Q4 of 2022: Jamie Lee Curtis in HALLOWEEN ENDS; Julia Roberts and George Clooney in TICKET TO PARADISE; Dwayne Johnson, Pierce Brosnan and Viola Davis in BLACK ADAM; Jessica Chastain, Anne Hathaway and Sir Anthony Hopkins in ARMAGEDDON TIME; Margot Robbie, Christian Bale and Robert De Niro in AMSTERDAM; Tom Hanks in A MAN CALLED OTTO; Brad Pitt and Margot Robbie in BABYLON; oh, and don’t forget the ever so much anticipated sequels to BLACK PANTHER, SHAZAM and AVATAR. So too should the movie slate for 2023 make us smile. Our current internal forecast is that the 2023 domestic box office, the basic metric suggesting the health of theatrical exhibition both in the U.S. and globally, will be billions of dollars larger than that of 2022. We look forward to Q4 of 2022 and calendar year 2023 with glee.”

— Adam Aron AMC Entertainment Chairman & CEO

Key Quotes About The Special Dividend:

“Today we are rewarding and recognizing our passionate and supportive shareholders, both to our shareholders in the U.S. and internationally, with a dividend of AMC Preferred Equity units that will trade on the NYSE under the ticker symbol APE. Shareholders will receive one AMC Preferred Equity unit for each company issued share of AMC common stock that they own. This means that based on our 516,820,595 shares outstanding, we will be issuing a dividend of 516,820,595 AMC Preferred Equity units.”

“The issuance only to our shareholders of tradable AMC Preferred Equity units clarifies who is included in our current shareholder base, and provides another avenue for our investors to participate in the ongoing recovery and growth of AMC.”

“The dividend of AMC Preferred Equity units exclusively to our shareholders in our opinion is perhaps the single biggest action we will take in all of 2022 to fundamentally strengthen AMC for the long term. This new AMC Preferred Equity gives AMC a currency that can be used in the future to strengthen our balance sheet, including by paying down debt or raising fresh equity. As a result, this dramatically lessens any near-term survival risk for AMC, as we continue to work our way through this pandemic. It also can provide AMC with added capital enabling us to seek investment opportunities that could create significant shareholder value and could be transformative in nature. All of this is not good news for those who may be rooting against AMC.”

“As a show of appreciation of our shareholders, and to celebrate this AMC Preferred Equity unit dividend, AMC will be issuing an exclusive “I OWN APE” NFT. All 765,000 current AMC Investor Connect members, and new members who join by August 31, 2022, will be eligible to receive for free this unique NFT to symbolize ownership of the new AMC Preferred Equity unit security. In addition, based on the popularity of the original “I OWN AMC” NFT issued in January of 2022, AMC Investor Connect current members and new members who have joined by August 31, 2022 also will be entitled to receive an updated version of the original “I OWN AMC” NFT, again gratis with our compliments.”

“This AMC Preferred Equity unit dividend has tremendous potential to create meaningful value for both AMC and for our shareholders as we continue on our glidepath to recovery and transformation into the new AMC – bigger, bolder, and stronger than ever before.”

— Adam Aron, AMC Entertainment Chairman and CEO