AMC Entertainment Holdings (AMC) operates a vast network of movie theaters and screens, focusing on customer engagement via its subscription and loyalty programs, mobile apps, and website. It offers its services in a variety of options such as plush, power recliners, AMC Dine-In Theatres, MacGuffins full bars, and premium presentation.

With over 10,700 screens across 960 theatres, the company operates across the US and Europe with its headquarters in Leawood, Kansas.

About AMC Stock

AMC's stock has been highly volatile this year, down 14% year-to-date and 33% from its 52-week highs. However, it's recently rebounded, gaining roughly 30% in the past month and 12% over the last quarter.

AMC's Q1 Results

Last month, AMC Entertainment posted its first-quarter results posting a loss of $0.58 per adjusted share, narrower than the $0.78 loss reported in the same quarter last year. The figure comes against the analyst’s estimated loss of $0.61 per share. The company generated $862.5 million in revenue easily surpassing Wall Street’s $838.97 million estimate.

AMC’s revenue can be divided into three parts: First, Food and Beverage, where the company recorded $283.40 million in revenue against the analyst’s $283.53 million estimate. Second, Admissions, where the company had $473.50 million in revenue, outpacing the analyst’s $466.53 million estimate. Third, Other Theatre, where the company posted $105.60 million in revenue, easily exceeding the analyst’s $88.93 million estimate.

Adjusted EBITDA came to a loss of $58.0 million, wider than last year’s loss of $21.2 million. AMC ended the quarter with a cash balance of $378.7 million. AMC’s attendance declined 10% YoY to 41.9 million reflecting budget consciousness among people and their preferred choice.

More Ad-Time on AMC

As per a Bloomberg report, AMC Entertainment is set to increase the time of its commercials before the start of a movie. At present the theatre shows 20 mins of preshow materials before the movie starts and during intervals. Now as per reports AMC has reached an agreement with National CineMedia @NCMI, the company operating the advertisements in theatres such as AMC, Regal Cinemas, and Cinemark Holdings @CNK.

Additionally, the report also states that AMC will be introducing a “platinum spot”, which will be on display before the start of the movie with the theatre chain getting a piece of the revenue for the additional advertisement played.

The move is expected to help theatre chains' revenue stream allowing them to sustain ticket price concessions such as the recent half-price Wednesday offer. This will also enable the company to offset its operating costs, the extra advertisement revenue can help them cover the rising expenses such as film acquisition costs and staffing.

Let's look at AMC’s competitors such as Regal and Cinemark. They have already adopted a preshow advertisement which shows the customer's willingness to sit through those extra minutes for a cheaper ticket.

Although other entertainment hubs have embraced the move, it remains to be seen how AMC’s customer base will respond to the move.

Analyst Take on AMC

Analysts are skeptical of AMC at the moment, in consensus Wall Street has a “Hold” rating with a mean price target of $3.12, which is below its trading price reflecting a downside potential of 8% from where the stock is currently trading.

The stock has been covered by 7 analysts and has received 6 “Hold” ratings and 1 “Strong Sell” rating.

Key Takeaways

AMC Entertainment Holdings is navigating a challenging market. Despite its expansive network of theaters and innovative customer engagement strategies, the company faces significant stock volatility, though it has seen a recent rebound. While AMC's Q1 results surpassed revenue estimates, attendance declined and adjusted EBITDA widened, highlighting ongoing operational pressures. The strategic move to increase pre-show advertising aims to boost revenue and offset rising costs, a tactic already employed by competitors like Regal and Cinemark. However, the impact on customer response remains to be seen, as analysts maintain a cautious "Hold" rating on AMC stock, anticipating further downside from current levels.