AMC Stock Surged as Its Q4 Earnings Preview Shows Another Terrible Q4, but 2023 Has Hope

AMC Stock


On Monday, shares of AMC Entertainment (NYSE:AMC) are trading at +9% ahead of the company’s fourth-quarter earnings reports, which are due to be released on Tuesday, February 28th, after the market closes. As a result, AMC stock surged. 

Late in December, the movie theater company made public its intention to convert its preferred shares into common stock, raise an additional 110 million dollars in equity capital, and exchange debt for equity. Since then, the AMC stock price has increased by around 72%.

According to B. Riley Securities, the transaction can “open the door to a massive equity raising opportunity for the company in the coming years.” This is because the AMC Preferred Equity unit (APE) holders effectively control the vote, as their combined holdings account for 64% of the total.

But, since then, AMC’s intentions have run into an obstacle in the form of a class-action lawsuit that seeks to postpone the scheduled vote. Plaintiffs allege AMC and its board of breaking Delaware General Corporation Law and failing to uphold their fiduciary responsibilities.

The third quarter results for the biggest theater chain in the world showed a more significant deficit and a massive cash burn. The year 2022 was not a good one for the movie office, and the third quarter, in particular, was a disaster since no huge blockbuster films were released then.

Wedbush anticipates that early-quarter attendance trends will be slower than initially expected and that operating expenditures and concessions costs will remain elevated due to inflation, higher salaries, high energy prices, and still-elevated supply chain costs.

But, Wedbush believes that theater admission patterns are on the route to normalcy and that 2023 will see an improvement in the release slate. Also, AMC has ample cash on hand to continue functioning while focusing on reducing its debt.

The average estimate for earnings per share is $0.21 (a decrease of 90.9% year over year), while the consensus estimate for revenue is $1.05 billion (a decrease of 10.3% year over year).

Over the last two years, AMC has beaten forecasts for its earnings per share and its sales 75% of the time.

Estimates of EPS have been revised either higher or lower during the last three months. There has been one negative change in the revenue predictions and four positive revisions.

Featured Image:  Freepik @ serhii_bobyk

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.