Wednesday, Feb. 23 was light on company-specific news that could have impacted AMC stock. (CMA) – Get the Class A report from AMC Entertainment Holdings, Inc.. However, the IMAX Corporation cinema peer (IMAX) – Get the IMAX Company Report delivered Q4 results which seemed encouraging for the industry as a whole.
Today, Wall Street Memes takes a look at this earnings report and assesses whether it could be a catalyst for AMC stock to rise higher.
(Learn more about Wall Street memes: Will SoFi stock soar 80% this year?)
IMAX: the pandemic is behind
On the headlines, IMAX revenue that nearly doubled YOY overcome Wall Street expectations of $20 million. The bottom line looked just as good: non-GAAP EPS of $0.31 was nearly double the consensus estimate of $0.17.
But when it comes to AMC, the pandemic recovery narrative is what I think was most important. Here, it was impressive to see IMAX performing well not compared to last year, but even to 2019. Below is a quote from the company’s earnings release:
“Quarterly results met or exceeded pre-pandemic levels for key metrics. IMAX generated operating profit, global box office and gross margin in the fourth quarter of 2021 that exceeded the fourth quarter of 2019; as well as quarterly Adjusted EPS and Adjusted EBITDA substantially in line with the fourth quarter of 2019.”
In an interview with CNBC after the closing bell, IMAX CEO Richard Gelfond expressed confidence about the industry in 2022. First, he pointed to the strong demand for theater experiences after what he considers two years of disappointing content releases on streaming platforms.
Then he pointed to a solid lineup of movies coming in the next two months alone: Batman, Jurassic World, Dr. Strange, Top Gun, and Thor. The Avatar sequel later in the year should also be a key event, according to the CEO.
IMAX stock traded up 9% in the after-hours session, but the price slipped slightly from the high on the company’s earnings call.
AMC: probably a beneficiary too
To be fair, IMAX and AMC’s service offerings are a bit different, even though both operate in the same industry. Yet the same factors that benefit one are likely to benefit the other – i.e. strong box office demand, consumer willingness to allocate entertainment dollars to movie theaters and a solid lineup of new upcoming movie titles.
AMC is in the midst of its own recovery. During the third quarter earnings season, the company reported global attendance of 40 million, which was significantly higher than just 7 million in the first quarter. In October, attendance had reached 70% of 2019 levels compared to 46% in the third quarter.
The company’s fourth-quarter earnings day won’t be until next week, March 1. But not only do I expect the financial performance to be strong (in fact, much of it has already been announced in advance), I also think CEO Adam Aron will seem at least as optimistic as usual about the recovery.
Could AMC stock rise?
In after-hours action, the IMAX numbers didn’t quite translate to strength for AMC. Despite IMAX’s rise, AMC shares fell slightly a few hours after the closing bell.
Therefore, it is not certain that encouraging news regarding the film industry will push AMC shares higher on Thursday. Price action will likely depend on a few other factors, including (1) the tone of the general market, which is currently in correction mode, and (2) the enthusiasm (or lack thereof) of investors, traders and “ monkeys” from AMC.
(Disclaimer: This is not investment advice. The author may own one or more stocks mentioned in this report. Additionally, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)