To The Moon

$AMC Entertainment(AMC)$ is expected to post its quarterly earnings on 25 Feb 2025 after market closes.

It is expected to post a loss of $0.18 per share for the current quarter, representing a year-over-year change of +70.4%.

AMC Entertainment (AMC) Last Positive Earnings Call Saw A 25.11% Negative Change

AMC has a positive earnings call on 06 Nov 2024 but we saw AMC share price suffered a 25.11% change since, the earnings call highlighted a strong recovery in the box office and AMC's financial performance, with significant achievements in revenue and strategic initiatives such as debt extension and product expansion.

However, challenges in the European market and slight domestic market share decline were noted. Overall, the sentiment is positive, reflecting optimism for future growth and strategic investments.

AMC Entertainment (AMC) Guidance To Focus On Future Investment

In the AMC Entertainment Holdings' Third Quarter 2024 Earnings Call, AMC provided several key metrics highlighting their financial recovery and future guidance. The domestic industry box office reached a post-pandemic third-quarter high of $2.7 billion, up 37% from the previous quarter. AMC's total revenues increased by 31% from the second quarter of 2024, and their net loss was reduced by 37%. Adjusted EBITDA was four times stronger than the prior quarter, marking the second-best third-quarter performance in AMC's history.

Despite attendance being 25% lower than in Q3 2019, the adjusted EBITDA was comparable to pre-pandemic levels. The company has successfully extended $2.4 billion of long-term debt maturities and paid down $345 million of debt.

Looking forward, AMC anticipates a robust Q4 2024 with major releases like "Mufasa: The Lion King" and "Wicked." The company plans to invest between $1.0 billion and $1.5 billion over the next 4 to 7 years to enhance their theaters, aiming to capitalize on the expected rise in the theatrical box office.

Factors That Could Provide A Reversal To AMC Share Price Post Q4 Earnings

Q4 Box Office Performance To Continue With Major Releases

The domestic industry box office set a third-quarter post-pandemic high of $2.7 billion, marking a 37% increase from the second quarter of 2024. AMC experienced a decline in North American market share by approximately 60 basis points due to the film slate skewing away from major urban centers.

The recent economic data have suggest that the economy is still exhibiting a strong growth, this might boost discretionary spending on entertainment, while a recession could reduce theater attendance. Q4 includes holiday releases. Major releases could drive box office revenue. A weak slate or underperforming films would hurt earnings.

Strong Financial Metrics and Debt Maturity Extension

AMC's net loss in Q3 2024 was narrowed by 37% compared to Q2 2024, and total revenues were up by 31%. AMC extended up to $2.4 billion of its long-term debt maturities from 2026 to 2029 and 2030, and paid down $345 million of debt year-to-date in 2024.

AMC’s ability to refinance or reduce its significant debt load will affect profitability. High interest payments could dampen earnings despite revenue growth.

Record Admissions Revenue and Food/Beverage Sales

AMC achieved a new record for third-quarter admissions revenue per patron and set an all-time record for any quarter for food and beverage revenues per patron.

We should see an improvement in the admission revenue in Q4 2024 due to the holiday sales. But one factor that might bring down the revenue would be AMC's consolidated attendance was approximately 12% below the same period last year, with a 16% attendance decline in European markets similar in Q3 2024.

Expansion of AMC Perfectly Popcorn

AMC's popcorn product line expanded to more than 6,000 retail locations in 2024, with plans to reach 10,000 or more locations by mid-2025.

Launch of AMC's G.O. Plan

AMC announced a multiyear initiative to invest between $1 billion and $1.5 billion in upgrading theaters and enhancing the moviegoing experience.

AMC Entertainment (AMC) Price Target

Based on 4 Wall Street analysts offering 12 month price targets for AMC Entertainment in the last 3 months. The average price target is $3.63 with a high forecast of $4.00 and a low forecast of $3.25. The average price target represents a 5.83% change from the last price of $3.43.

I would think that there might be an earnings surprise which could drive the share price toward the higher price target due to the holiday sales and lower interest rates in Q4 2024, consumers would be more willing to spend on movies for the holiday season.

Technical Analysis - Exponential Moving Average (EMA)

As AMC remain range bound but still not able to get close to the 50-day period, and with RSI showing a decline, we could be expecting AMC to experience some challenge.

But if the sentiment were to increase due to the holiday season spending, and RSI show sign of crossover, then we could be seeing a price reversal and AMC might move close to the 200-day period.

So I will be monitoring the trading closely on Monday (24 Feb) to see how investors perceive AMC earnings which would happen on 25 Feb 2025.

Summary

AMC could benefit from the major releases in the Q4 2024, and with the holiday season and a stronger economy in Q4, we could expect consumer to spend more on the movies and theatre.

I am expecting an improvement in earnings from Q3, but the share price would need to gather investors sentiment back in order to show some potential signs of reversal, so we might want to watch the trading on Monday (24 Feb) closely.

Appreciate if you could share your thoughts in the comment section whether you think AMC could stage a reversal with an earning surprise.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.