The largest operator of movie theaters, AMC Entertainment (NYSE:AMC) stock had a wild 2021 as one of the original “meme stocks” skyrocketed only to slowly meltdown in 2022.
AMC was the poster child of pandemic epicenter stocks on the verge of bankruptcy. However, the abundance of short-sellers caused shares to short squeeze and maintain lofty levels for much of 2021, along with its meme stock peer GameStop (NASDAQ: NYSE:GME).
This enabled AMC to raise much needed cash to pay down debt and survive long enough to ride the reopening wave with deeper market share as a survivor. Now that the reopenings have come, but are still threatened by the COVID-19 Omicron surge, the shares have since been in meltdown mode.
The blockbuster Spiderman: No Way Home continues to break box office records, lending to the improving fundamentals for AMC. Prudent investors seeking exposure into the nation’s largest cinema operator can watch for opportunistic pullbacks in shares of AMC Entertainment.
Q3 FY 2021 Earnings Release
On Nov. 8, 2021, AMC released its fiscal third-quarter 2021 results for the quarter ending September 2021. The Company reported an earnings-per-share (EPS) loss of (-$0.44) excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.54), beating estimates by $0.10. Revenues rose 538.7% year-over-year (YoY) to $763.2 million versus $742.15 million.
Conference Call Takeaways
AMC CEO, Adam Aron set the tone,
“At the beginning of 2021, we shared with you our view that both the film exhibition industry and AMC would see sequential improvements in the industry-wide box office during the course of 2021. And indeed, we are seeing exactly that. The industry's box office has been meaningfully increasing each and every quarter, thanks to improved vaccination levels and an increasingly appealing film slate. Add to that AMC's commitment to robust health and safety protocols through AMC's Safe & Clean and our stepped-up marketing activity, and our numbers per attendance and admission ticket revenues at AMC also continue to rise.
"When we reported second quarter 2021 numbers, I said on that quarterly earnings call in August that “AMC crushed it.” I didn't say that because we were yet profitable or because we were out of the pandemic woods at that point, but rather because our results were so much better than market expectations and also because Q2 results were so much stronger than Q1 results.
"In that spirit, the just announced Q3 results for AMC, once again, are encouraging. Our numbers for attendance, revenues, adjusted EBITDA, and net loss continued to markedly improve and continue to be well ahead of consensus to market expectations. Looking at our industry. The third quarter of 2021 posted the largest domestic industry box office of the year and nearly $1.4 billion, 66% higher than that of Q2 2021, and 486% higher than that of Q1 2021.
"And as for AMC more specifically, here are just a few snippets of the improving performance that we reported today. The global attendance count for AMC in Q3 2021 was 40 million people. Now we'd not normally be smiling at an attendance level that was not even half of what it was two years ago. But again, this attendance count of $40 million in Q3 of this year is so very much larger than the 22 million guests we had with us in Q2 of this year, or the 7 million guests we had in Q1 of this year. And for that matter, the 40 million guests in Q3 are so much higher than the 8 million guests we had in Q4 of 2020, the 6.5 million guests we had in Q3 of 2020, and the mere 100,000 guests we had in Q2 of 2020. 40 million AMC guests in Q3 2021 was up 81% from our Q2 2021 attendance, and up 488% from our Q1 2021 attendance.”
CEO Aron concluded,
“As we sit here today, we have signed 3 signed leases and 5 signed letters of intent on particularly appealing potentially successful movie theater pickups around the U.S. 7 of the 8 are coming to us from Arclight Pacific Theaters, which has ceased operations as you know. Beyond these 8 new theaters, we are continuing to review additional new theater opportunities that are coming our way.
"And finally, there are our 7 new, in our opinions, simply stunning Nicole Kidman television commercials for AMC Theaters in the U.S., also been used for all our theaters across Europe, which they did in September of 2021 in Q3, and in which Nicole Kidman reminds us all how wonderful it is to see, in her words, dazzling images on a huge silver screen, and that at AMC Theaters, we make movies better.
"Our Financial results have gotten stronger and stronger, and our Company is doing good things, innovative things in area, after area, after area. One can see and one can feel that our industry and our Company, AMC Entertainment, are on a path of recovery and improvement from this hard global pandemic that has occupied us all since early in 2020.”
AMC Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision near-term view of the price action landscape for AMC stock. The weekly rifle chart is attempting to hold the $19.68 Fibonacci (fib) level. The weekly downtrend has a falling 5-period moving average (MA) at $25.60 followed by the 15-period MA at $32.97. The weekly lower Bollinger® Bands (BBs) nearly overlap with the weekly 200 period MA at $15.52. The weekly stochastic formed a low band mini inverse pup.
The daily rifle chart is in a downtrend with falling 5-period MA at $21.82 followed by the 15-period MA at $24.66. The daily stochastic has a low band mini inverse pup under the 20-band with lower BBs at $17.42. The daily market structure low (MSL) buy signal triggers on a $24.17 fib breakout.
Prudent investors can watch for opportunistic pullback levels at the $19.68 fib, $17.89 fib, $16.44 fib, $14.54 fib, $13.13 fib, $12.32 fib, $9.80 fib, and the $8.34 fib level. Upside trajectories range from the $27.43 fib up towards the $41.86 fib level.