Tenet Is Not the Hero AMC Stock Needed
Christopher Nolan may be the best superhero movie director ever (my opinion only). But, when it comes to saving movie theaters during a global pandemic, he may not be quite the hero we need. And AMC Entertainment Holdings (NYSE: AMC) may pay the price for that.
Nolan’s new film, Tenet, may be the blockbuster of the year, but when the blockbuster of the year has grossed only $29 million domestically to date, that’s, well… not great.
Meanwhile, AMC stock has been declining over the past week. While shareholders were hoping for a blockbuster boost from Tenet, it seems that movie season continues to unspool with a whimper, not an airplane-explosion-level bang.
The Movies Are in Trouble… What Hero Can Save Them?
AMC stock isn’t suffering because people hate movies. It’s suffering because people are still trapped in the clutches of a global viral pandemic. Nevertheless, Tenet was the blockbuster investors were hoping would propel the movie theater chain through the end of the year.
Well, that hope kind of fizzled out.
Warner Brothers, which is owned by AT&T (NYSE: T) is the ultimate Christopher Nolan fanboy. Unfortunately, it seems evident that it was not pleased with the results of Tenet to date. This is borne out by the fact that it is pushing its next giant blockbuster release, Wonder Woman 1984, back from October to Christmas.
But can you blame audiences for staying away? Is two hours seeing a flick and munching on some popcorn really worth the risk of catching a disease that has now sickened 6 million people in the U.S. alone? It hardly seems worth it. And that means movie theaters continue to be in trouble.
Where AMC Stock Has Been
As anticipations built for a Labor Day weekend movie theater relaunch, we did temporarily see the price of AMC stock rise from $5.19 to $7.02. But that hopeful gain was not to last. Since that peak, the stock has dropped back down to $5.52 yesterday.
Year-to-date, the stock is down more than 23%, and over the past year, it’s down more than half its value. That’s not all that shocking as the pandemic has caused AMC’s quarterly net income to plummet from $49.4 million to a negative $561.2 million. Similarly, fully diluted earnings per share (EPS) has dropped from $0.36 to negative $5.38.
This is a decline in the stock price that nobody could have seen coming unless they had predicted this global pandemic in the first place. Nevertheless, it’s here and AMC has suffered greatly.
Where Is AMC Stock Going?
Of course, the answer to that question is nobody knows for sure. There are too many factors at play. Will we get new COVID-19 treatments that can help prevent hospitalizations and deaths? When will a vaccine actually arise and how effective will it be?
The problem is, it seems that until we have some powerful coronavirus treatments or a vaccine, people aren’t too interested in returning to the box office. No matter what blockbuster is currently showing.
On the one hand, if AMC stock can survive this crisis, we may see a stock with a blockbuster rise in its long-term future. But unfortunately, a tragic demise of this marquee star seems equally possible.
About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.