Despite the buildup of COVID-19 cases and slow ticket sales in the workplace, AMC Theatres CEO Adam Aron made it clear last week that he was incredibly positive about the state of cinema and the long term of the company he runs, one that many investors were willing to leave just a few months ago. It’s not crazy, it’s just aimed at a new audience of shareholders, adding the populist embrace of everything AMC has created one of the confusing, unlikely, and downright bizarre peak bounces of the inventory market. of this time or any other.
AMC could have possibly escaped persistent bankruptcy threats, effectively defying its skeptics and surviving the COVID-19 pandemic, yet it fits into another business. This truth was highlighted last week at the company’s quarterly earnings call, in which the nation’s largest expo chain followed the prestige of its meme inventory and adapted its comments to appease its new base of young retail investors. , many of whom are more interested in sticking. for Wall Street short traders than to reward trading fundamentals. A significant portion of the clever comments via Aron were true to his resolve to embrace cryptocurrency and marry GameStop. The latter was a true example of a stir given that after first poking fun at investors with the promise of “more to come” about the prospect of an alliance with GameStop (another inventory of memes), Aron admitted that AMC has yet to agree. had contacted the company. But “we have a tendency to do it,” he noted hopefully. State companies sometimes do not tend to provide data on possible marriages that are at such an early stage.
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But Aron, a showman known for sprinkled a Churchill quote or two on earnings calls, has a clever explanation for why appeal beyond institutional investors. Thanks to the web frenzy surrounding its shares, AMC was able to resolve its monetary scenario and renegotiate the company’s large debts. The exhibitor said he had $1. 81 billion in money and more than $2 billion in money.
“We would like to think that one day, when a movie about AMC and COVID is filmed, his name will be a compelling word,” Aron said in a statement. “But time will tell. “
Playing in front of the crowd has been a successful strategy for GAC. The company’s percentage value has increased 1,500% since January, and while it doesn’t trade at the $72. 62 it enjoyed in June, its current value of more than $36 is still not tied to the gravitational force of classic measures like profit and loss. It’s a company that negotiates about emotion, not data, hence Aron’s pivot. In recent months, AMC has issued more percentages to meet demand from retail investors, even though monetary gurus have remained skeptical about the company’s long-term health. That’s why his request for effects was directed more to Reddit than to Wall Street, and the AMC chief spent most of his time answering questions that had been sent through percentage holders than analysts.
“The ownership of the company has been drastically replaced,” says Eric Wold, an analyst at B. Riley and Company. ” If institutional interest titles have been replaced because it takes over, it makes sense to adjust where questions are asked. they’re changing the way they answer those calls. It is not usual or typical, but it is understandable. “
Adam’s symbol of the film industry turns out to be at odds with reality. While there have been abundant improvements, the national picture remains seriously challenged and is nowhere near pre-pandemic levels. During last Monday’s call, Aron said AMC could generate enough cash to cover its operating prices through the end of the year if the national fund reached at least $5. 2 million. , to get closer to that reference point. Box analysts say Aron’s projections are too positive and think the final total will be somewhere in the $4 billion range.
And the scenario surrounding price ticket sales hasn’t moved on since Aron submitted his pink appraisal. Ryan Reynolds’ “Free Guy” opened at $ 28. 4 million more than expected, but with a production budget of $ 100 million, he will still have to fight and find his way to profitability, especially given the tough overseas market, where many countries are fighting bad COVID epidemics. Other recent releases, such as Disney’s “The Suicide Squad” and “Jungle Cruise,” faded to poor effect while showing on streaming services, a pandemic-era concession that depresses box earnings. Additionally, customer confidence surveys conducted through NRG have shown a dramatic drop in public willingness to return to theaters as the Delta variant wreaks havoc in parts of the country. Confidence was positive over 80% for the return to theaters in early July, before falling this week to less than 65%. Most disturbingly, the biggest drop in customer confidence is among moviegoers with young children, who cannot get vaccinated. This can jeopardize the recovery of in-house films, which are popular with customers and generate strong sales at dealerships.
“When you say you’re overwhelming it, it sounds fallacious because the workplace in the box is failing,” says Eric Handler, an analyst at MKM Partners. “GAC still has a long way to go before it reaches breakeven. You have a lot of interest bills and landlords to pay. They don’t weigh it. They do what they can. They’ve cut prices and tried to be more efficient, but they’re still burning money. “
As Handler suggests, AMC remains heavily leveraged. It has a debt of $5. 5 billion, which will require significant bills over the next half-decade. In 2022, GAC has only $20 million in capital and adulthood bills, however, this figure rises to $3. 8 billion in 2026. It will most likely be renegotiated or renewed, as the leaders of Aron and GAC have shown skillful hand in controlling the company’s balance sheet. But the annoying thing about the debt is that it has to be repaid, not to mention the interest bills, for which GAC dispensed more than $98 million to service in the last fiscal quarter.
But Aron insists that AMC is in expansion mode. The company secured several high-performance rentals that previously operated through the defunct Pacific Theatres chain, and the AMC director lamented the fact that it wasn’t allowed to raise even more capital in the market to power everything. From the prospective production of their own films to the purchase of more competitors. Aron talked about diving into more choice content, projecting UFC fights or hosting gaming conventions. It has even thought about the option of generating products with the AMC brand. The enthusiasm contagious, but seemed shocking given that movie studios are watching the COVID-scared retail landscape with horror. In a recent article in the Hollywood Reporter, for example, an unnamed film director admitted that he was reconsidering his decision to release films in theaters. “If I had known six weeks ago what I know now, I would have moved everything early next year,” the executive told the publication.
To be fair, just a few months ago, in January, GAC shares were trading at less than $2. People feared that the company was on the verge of insolvency. it has enjoyed among its clients, as well as Aron’s miraculous ability to access markets in search of greater liquidity and locate better conditions for its debt. AMC’s survival is far from assured, so his recovery is miraculous. of this complicated time still faces challenges.
“It’s still a very complicated story,” the manager says. They don’t go through bankruptcy They communicate about record liquidity. Great, it will save you [AMC] from bankruptcy, but what’s the value of that liquidity?They diluted shareholders by 80% to get that liquidity. “
“I give Adam credit,” the manager adds. They did their best until bankruptcy, but survival came at a very high price. “
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