Movie theater operator shares suffer sixth straight loss, longest losing streak in 9 months
Shares of AMC Entertainment Holdings Inc. extended their selloff toward a 17-month low on Wednesday, after B. Riley analyst Eric Wold slashed his price target on the belief the post-pandemic box office recovery will be more drawn out that previously forecast.
"Although consumer demand remains intact, in our opinion, the number of films released to theaters remains 50% below pre-pandemic levels -- which impacts both the cadence of moviegoing and the ability to catch trailers for upcoming films," Wold wrote in a note to clients.
He now projects 2022 box office to be 30% below 2019 levels and 2023 box office to be 16% below, compared with previous projections of 28% below and 7% below, respectively.
"We now believe it may not be until 2024 before the domestic box office can again surpass $11 billion -- as was the case for every year between 2015 and 2019," Wold wrote.
AMC's (AMC) fell 4.4% to $5.85 on Wednesday, the lowest close since May 7, 2021, which was just before the movie theater chain got caught up in the big "meme-stock" craze of spring 2021.
It has tumbled 25.3% amid a six-day losing streak, which was the longest such streak since the 11-day stretch that ended Jan. 27, 2020.
B. Riley's Wold reiterated the neutral rating he's had on AMC since May 2021, but cut his stock price target to $7.50 from $11.00.
He also lowered his third-quarter revenue estimate to $978 million from $1.09 billion, which compares with the current FactSet consensus of $1.01 billion, and dropped his 2022 estimate to $4.17 billion from $4.44 billion.
AMC shares have tumbled 39.0% over the past three months, while videogame retailer and fellow "meme stock" GameStop Corp.'s stock (GME) has slumped 26.0% and the S&P 500 index has lost 6.3%.
Meanwhile, AMC Preferred Equity Units , known as "APEs," sank 6.8% to their lowest-ever close of $1.64, and have plunged 40.1% over the past six sessions.
Wold said the weakness results from a combination of concerns over management issuing shares and over the sheer number of units that could be issued.
"While we would suspect the board [of directors] has some floor where they would no longer issue units, we believe that floor could be quite low given the ability to de-lever the balance sheet and avoid the fate of Cineworld far outweighs adding to the equity dilution that has already been occurring since late 2020," Wold wrote.
Cineworld Group PLC (CINE.LN) is the U.K.-based movie theater chain that filed for bankruptcy in September.
Separately, Wold cut his stock price targets on Cinemark Holdings Inc. (CNK) to $17 from $23, on IMAX Corp. (IMAX) to $20 from $25, on National CineMedia Inc. (NCMI) to 50 cents from $1.00 and on Marcus Corp. (MCS) to $22 from $28.
He rates National CineMedia at neutral, but has buy ratings on Cinemark, IMAX and Marcus.
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