AMC Entertainment, one of the largest theater chains in the world, recently issued a warning to investors about declines in key metrics during the second quarter. The company attributed these declines to the lingering effects of the actors and writers strike that occurred in 2023. As a result, theatrical releases were significantly reduced in the early months of 2024, leading to weakness in revenue.
Preliminary results from AMC revealed a staggering 23% decrease in revenue, amounting to $1.03 billion for the quarter. Additionally, the company is expecting a net loss of $32.8 million, compared to a profit of $8.6 million in the same quarter of the previous year. These disappointing numbers have caused AMC’s shares to drop more than 5%.
Adam Aron, chairman and CEO of AMC Entertainment, addressed the impact of the actors and writers strike on the company’s performance. He stated that the strike had severely limited the number of movies being released theatrically, which in turn affected their financial results for the second quarter. Aron emphasized that these results should be viewed in comparison to the same quarter of the previous year, rather than as an indication of ongoing weakness.
Despite the challenges faced by AMC, the theatrical industry as a whole has experienced a recent resurgence. Moviegoers have returned in large numbers to enjoy highly anticipated films like “Inside Out 2,” “Despicable Me 4,” “Twisters,” and the surprise hit “Longlegs.” This renewed interest in moviegoing has brought optimism to the industry.
Looking ahead, AMC has several blockbuster releases lined up for the rest of the year. The highly anticipated “Deadpool and Wolverine” from Disney and Marvel is expected to break records for the highest opening of an R-rated film in history. Other major releases include “Beetlejuice Beetlejuice,” “Joker: Folie a Deux,” “Venom: The Last Dance,” “Gladiator II,” “Moana 2,” “Wicked,” “Kraven the Hunter,” “Sonic the Hedgehog 3,” and “Mufasa: The Lion King.” These films are expected to drive increased revenues and strengthen AMC’s position in the market.
Adam Aron remains confident about the future of AMC. He believes that industry-wide movie revenues will continue to show increasing strength in the second half of 2024 and beyond. As a result, AMC should see improvements in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). Aron’s positive outlook is based on the assumption that overall industry revenues will continue to climb.
It is worth noting that Comcast, the parent company of NBCUniversal and CNBC, has a stake in AMC Entertainment. This disclosure adds transparency to AMC’s relationship with Comcast and its subsidiaries.
In conclusion, while AMC Entertainment faced challenges in the second quarter due to the lingering effects of the actors and writers strike, there is optimism for the future. The theatrical industry is experiencing a resurgence, and AMC has a lineup of highly anticipated films that are expected to drive revenue growth. With increasing industry-wide movie revenues, AMC has the potential to see improvements in earnings and adjusted EBITDA. Despite the recent decline in key metrics, AMC’s future appears bright.
